Investigating the Short-Term and Long-Term Effects of Private and Public Investments Uncertainty on Economic Growth in Iran

Document Type : Original Article

Authors

1 Ph.D. Student in Economics-Economic development and planning, Department of Economics, Razi University and and Researcher at Institute for Trade Studies and Research

2 Associate Professor, Department of Economics, Razi University

Abstract

Investment is considered a most significant variable in the demand of the entire society and Determinant of economic growth. In one type of classification, investment includes two types of private and public investment that affect each other. However, the geographical, political and economic situation in developing countries, especially Iran, brings a high degree of economic uncertainty, which has a It has a lot of influence on the on economic variables, Particular the private and government investments, and Consequently It causes disruption to economic growth. Therefore, the aim of the present study was to investigate the short-term and long-term effects of private and government investments uncertainty on economic growth in Iran in the period of 1962-2021 using the ARDL approach. Also, the data of uncertainty variables of private and public investments have simulated using Vasicek‘s Mean Reverting Stochastic Differential Equation method. The results have shown the existence of a long-term relationship between the variables of the model. On the other hand, the error correction coefficient in the ECM model also indicates that in each period, about 56% of imbalances corrected and the model converges towards the long-term equilibrium value. In addition, the long-term model estimation results indicate that the variables uncertainty ratio of private investment to economic growth, uncertainty ratio of public investment to economic growth, active population growth rate, inflation rate, non-oil export growth rate have a negative and significant relationship with the dependent variable of the economic growth rate; While the oil revenue growth rate variable has a positive and significant relationship with the dependent variable of the economic growth rate. Also, the variable of the imposed war had a negative and significant relationship with the economic growth variable.

Keywords

Public Sector Economics Studies
Volume 3, Issue 1
April 2024
Pages 7-40

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History

  • Receive Date: 14 August 2023
  • Revise Date: 26 September 2023
  • Accept Date: 30 September 2023

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