The Impact of Public Expenditures Reallocation on Long-Run Economic Growth in Iran

Document Type : Original Article


1 Ph.D Candidate in Economics, Faculty of Economics and Administrative Sciences, University of Mazandaran, University of Mazandaran

2 Associate Professor of Economics, Faculty of Economics and Administrative Sciences, University of Mazandaran

3 Professor of Economics, Faculty of Economics and Administrative Sciences, University of Mazandaran, University of Mazandaran


The limitation of financial resources of the government in developing countries, caused these governments to consider the issue of "efficient allocation of expenditures" as a very high priorities in these countries. Accordingly, this paper examines the impact of public expenditure reallocations on economic growth in Iran. To do so, a long-run relationship between the variables has been estimated using cointegration method for the period 1980-2014. The results show that reallocation of government resources have a significant positive effect on economic growth, under the condition of raising the educational expenditure compensated by the reducing military and consumption expenditures. In addition, the findings of the paper show a reduction in consumption, military and health expenditures, in the favor of increasing government investment expenditure, have a significant and positive impact on the economic growth. Finally, the findings support a significant and positive impact of human capital and openness on economic growth.


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