This study seeks to analyze the effects of governance index and monetary and financial policies on economic well-being in Iran's recession and prosperity regimes. For this purpose, the effect of the study variables during the period of 1996 to 2022 was investigated using the Markov Switching (MS) rotation and regime change model. Based on the results, per unit increase in financial stability; Economic welfare increases by 0.19 units during boom and 0.02 units during recession. Also, government spending during prosperity leads to an increase of 0.03 units in economic well-being. Government governance, government tax revenue, liquidity volume and interest rate of real facilities during the recession lead to a decrease of 0.08, 0.13, 0.03 and 0.12 units of economic well-being. The experience of Iran's economy has shown that there is always a budget deficit in times of prosperity and recession. When the economy is booming, government revenues are certainly increasing and government expenditures are also increasing significantly. But when the conditions changed and the period of recession began, the government's incomes decreased drastically, but the government's expenditures did not change much. It should be noted that during the period of prosperity, budget deficits are generally created for development purposes, which lead to the supply of capital goods in the economy and will ultimately lead to positive economic prosperity. But during the recession, deficit financing is generally in a form that reduces the possibility of borrowing and investing in the private sector and is used to cover current expenses, which in this case has a negative impact on economic well-being.