Political institutions and government spending behavior in Iran

Arbeitspapier

This study examines how quality of political institutions affects the distribution of government budget and how development of government spending in major sections shapes the political institutions in Iran. This question has become especially important due to recent international sanctions, aiming to change the political behavior of Iran. We use the impulse response functions (IRF) and variance decomposition analysis (VDC) on the basis of Vector Autoregressive (VAR) model with annual data from 1960 to 2006. Our results show the importance of political institutions in patronage and public goods provision spending in Iran. The results imply that a shock in positive changes of democratic quality of institutions leads to negative and statistically significant response of military spending and positive and statistically significant response of education expenditures in short term. If sanctions are successful to change the political behavior of Iran in short run (Dizaji and Bergeijk, 2013), then one can also expect to see a reduction in allocated budget for military in Iran.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: MAGKS Joint Discussion Paper Series in Economics ; No. 03-2014

Classification and Topics

• Classification: Wirtschaft ; Structure, Scope, and Performance of Government ; Public Goods ; Capitalist Systems: Political Economy ; Economywide Country Studies: Asia including Middle East ; Institutions and Growth
• Subject: political institutions ; government spending ; Iran ; VAR modelling ; sanctions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dizaji, Sajjad Faraji ; Farzanegan, Mohammad Reza
• Event: Veröffentlichung
• (who): Philipps-University Marburg, Faculty of Business Administration and Economics
• (where): Marburg
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/95889
• Last update: 10.03.2025, 11:45 AM CET