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The Impact of Intergenerational Loss of Current Budget Operating Balance Deficit on Iran's Economic Growth

Author

Listed:
  • Moghadasi, Mohadeseh

    (Ph.D Student of Economics, Mazandaran University, Babolsar)

  • Pourfaraj, Alireza

    (Associate Professor of Economics, Mazandaran University, Babolsar)

  • Jafari Samimi, Ahmad

    (Professor of Economics, Mazandaran University, Babolsar)

  • Falahi, Mohammad Ali

    (Professor of Economics, Ferdowsi University of Mashhad, Mashhad)

Abstract

This article examines the intergenerational loss of current budget operation balance deficit on Iran's economic growth using time series quarterly data during the period of 1369:1-1397:4 (based on the latest quarterly data published in 1401). For this purpose, the Bayesian autoregressive model (BVAR) was used. In Iran's economy, in order to finance the accumulation of current budget debt, the government reduces the assets of the future generation to maintain the welfare level of the current generation and causes a decrease in welfare of the future generation, which is referred to as an intergenerational loss of turning oil and gas assets into current costs. Based on the results, the accumulation of debt caused by the current budget deficit has a negative effect on private sector investment and economic growth. In addition, the intergenerational loss of the current budget has a positive effect on private sector investment, as well as it has negative effect in the short term and a positive effect on economic growth in the long term. In other words, if the oil and gas revenues are allocated for productive investment, it will not only reduce the accumulation of current budget debt, but also increase sustainable economic growth in the long run

Suggested Citation

  • Moghadasi, Mohadeseh & Pourfaraj, Alireza & Jafari Samimi, Ahmad & Falahi, Mohammad Ali, 2023. "The Impact of Intergenerational Loss of Current Budget Operating Balance Deficit on Iran's Economic Growth," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 10(2), pages 1-30, September.
    • Handle: RePEc:ris:qjatoe:0306
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    More about this item

    Keywords

    Economic Growth; Operating Balance; Intergenerational loss; BVAR.;
    All these keywords.

    JEL classification:

    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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