Government budget deficits and the mechanisms used to finance them are among the most critical determinants of inflation dynamics in developing economies. The theoretical foundation of this study is grounded in the major schools of macroeconomic thought and seeks to explain the transmission mechanisms through which alternative budget deficit financing strategies generate inflationary pressures. In the Iranian economy, the persistence of fiscal imbalances, the predominance of fiscal policy over monetary policy, and the reliance on monetary and quasi-monetary sources to finance budget deficits have emerged as major structural drivers of chronic inflation. Despite the importance of this issue, a substantial proportion of the existing literature has not provided a comprehensive analysis of the transmission channels through which different deficit financing methods affect inflation. Accordingly, this study aims to systematically identify and analyze the inflationary transmission channels associated with government budget deficit financing and to examine the interaction between fiscal and monetary policies within a structural and institutional framework. The findings indicate that under conditions of fiscal dominance, financing budget deficits through borrowing from the central bank, the banking system, and the utilization of resources from the National Development Fund leads to an expansion of the monetary base, accelerated liquidity growth, heightened inflation expectations, increased exchange rate instability, and the depreciation of the national currency, thereby reinforcing the persistence of inflation. Furthermore, the results suggest that the inflationary consequences of alternative budget deficit financing methods depend on the prevailing theoretical framework, the institutional characteristics of the economy, and the validity of the Neo-Ricardian hypothesis. Therefore, mitigating fiscal dominance, strengthening fiscal discipline, and enhancing coordination between monetary and fiscal policies constitute essential prerequisites for achieving long-run price stability in the Iranian economy.