IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Political Institutions and Government Spending Behavior in Iran

  • Mohammad Reza Farzanegan

    ()

    (University of Marburg)

  • Sajjad Faraji Dizaji

    ()

    (University of Teheran)

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 llocated budget for military in Iran.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/03-2014_farzanegan.pdf
File Function: First 201403
Download Restriction: no

Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201403.

as
in new window

Length: 39 pages
Date of creation: 2014
Date of revision:
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:201403
Contact details of provider: Postal: Universitätsstraße 25, 35037 Marburg
Phone: 06421/28-1722
Fax: 06421/28-4858
Web page: http://www.uni-marburg.de/fb02/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Clémence Vergne, 2011. "Democracy, Elections and Allocation of Public Expenditure in Developing Countries," Working Papers halshs-00564572, HAL.
  2. Mohammad Reza Farzanegan, 2012. "Military Spending and Economic Growth: The Case of Iran," MAGKS Papers on Economics 201223, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  3. Timothy Besley & Masayuki Kudamatsu, 2006. "Health and Democracy," American Economic Review, American Economic Association, vol. 96(2), pages 313-318, May.
  4. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
  5. Patricia Funk & Christina Gathmann, 2009. "Does Direct Democracy Reduce the Size of Government? New Evidence from Historical Data, 1890-2000," CESifo Working Paper Series 2693, CESifo Group Munich.
  6. John F. Helliwell, 1992. "Empirical Linkages Between Democracy and Economic Growth," NBER Working Papers 4066, National Bureau of Economic Research, Inc.
  7. Bjorvatn Kjetil & Farzanegan Mohammad Reza & Schneider Friedrich, 2013. "Resource Curse and Power Balance: Evidence from Iran," Review of Middle East Economics and Finance, De Gruyter, vol. 9(2), pages 133-158, August.
  8. Farzanegan, Mohammad Reza & Markwardt, Gunther, 2009. "The effects of oil price shocks on the Iranian economy," Energy Economics, Elsevier, vol. 31(1), pages 134-151, January.
  9. Daron Acemoglu & Davide Ticchi & Andrea Vindigni, 2008. "A Theory of Military Dictatorships," Carlo Alberto Notebooks 74, Collegio Carlo Alberto.
  10. Deacon, Robert & Saha, Sarani, 2005. "Public Good Provision by Dictatorships: A Survey," University of California at Santa Barbara, Economics Working Paper Series qt1jk5b0vr, Department of Economics, UC Santa Barbara.
  11. Ronald Wintrobe, 2012. "Autocracy and coups d’etat," Public Choice, Springer, vol. 152(1), pages 115-130, July.
  12. Aidt, Toke S. & Jensen, Peter S., 2009. "The taxman tools up: An event history study of the introduction of the personal income tax," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 160-175, February.
  13. Robert R. Kaufman & Alex Segura-Ubiergo, 2005. "Globalization, Domestic Politics and Social Spending in Latin," Public Economics 0504009, EconWPA.
  14. Saint-Paul, Gilles & Verdier, Thierry, 1993. "Education, democracy and growth," Journal of Development Economics, Elsevier, vol. 42(2), pages 399-407, December.
  15. Julide Yildirim & Selami Sezgin, 2005. "Democracy and Military Expenditure: A Cross-Country Evidence," Transition Studies Review, Springer, vol. 12(1), pages 93-100, 07.
  16. repec:cup:cbooks:9780521855266 is not listed on IDEAS
  17. Pesaran, H. Hashem & Shin, Yongcheol, 1998. "Generalized impulse response analysis in linear multivariate models," Economics Letters, Elsevier, vol. 58(1), pages 17-29, January.
  18. Todd Landman, 1999. "Economic Development and Democracy: the View from Latin America," Political Studies, Political Studies Association, vol. 47(4), pages 607-626, 09.
  19. Profeta, Paola & Puglisi, Riccardo & Scabrosetti, Simona, 2013. "Does democracy affect taxation and government spending? Evidence from developing countries," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 684-718.
  20. James H. Stock & Mark W. Watson, 2001. "Vector Autoregressions," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 101-115, Fall.
  21. Ronald Wintrobe, 2001. "How to understand, and deal with dictatorship: an economist's view," Economics of Governance, Springer, vol. 2(1), pages 35-58, 03.
  22. Robert Deacon, 2009. "Public good provision under dictatorship and democracy," Public Choice, Springer, vol. 139(1), pages 241-262, April.
  23. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
  24. Aidt, T.S. & Dutta, Jayasri & Loukoianova, Elena, 2006. "Democracy comes to Europe: Franchise extension and fiscal outcomes 1830-1938," European Economic Review, Elsevier, vol. 50(2), pages 249-283, February.
  25. Barro, Robert J, 1996. " Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
  26. Hoffman, Dennis L & Rasche, Robert H, 1996. "Assessing Forecast Performance in a Cointegrated System," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(5), pages 495-517, Sept.-Oct.
  27. Kjell Hausken & Christian W. Martin & Thomas Plümper, 2004. "Government Spending and Taxation in Democracies and Autocracies," Constitutional Political Economy, Springer, vol. 15(3), pages 239-259, 09.
  28. Aidt, T.S. & Jense , P.S., 2007. "Tax Structure, Size of Government, and the Extension of the Voting Franchise in Western Europe, 1860-1938," Cambridge Working Papers in Economics 0715, Faculty of Economics, University of Cambridge.
  29. Atsuyuki Naka & David Tufte, 1997. "Examining impulse response functions in cointegrated systems," Applied Economics, Taylor & Francis Journals, vol. 29(12), pages 1593-1603.
  30. Aidt, T.S. & Daunton, M. & Dutta, J., 2008. "The Retrenchment Hypothesis and the Extension of the Franchise in England and Wales," Cambridge Working Papers in Economics 0818, Faculty of Economics, University of Cambridge.
  31. Aidt, Toke S. & Eterovic, Dalibor S., 2011. "Political competition, electoral participation and public finance in 20th century Latin America," European Journal of Political Economy, Elsevier, vol. 27(1), pages 181-200, March.
  32. Tavares, Jose & Wacziarg, Romain, 2001. "How democracy affects growth," European Economic Review, Elsevier, vol. 45(8), pages 1341-1378, August.
  33. M. Hakan Berument & Nildag Basak Ceylan & Nukhet Dogan, 2010. "The Impact of Oil Price Shocks on the Economic Growth of Selected MENA1 Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 149-176.
  34. Habibi, Nader, 1994. "Budgetary policy and political liberty: A cross-sectional analysis," World Development, Elsevier, vol. 22(4), pages 579-586, April.
  35. Sajjad Faraji Dizaji & Peter A G van Bergeijk, 2013. "Potential early phase success and ultimate failure of economic sanctions," Journal of Peace Research, Peace Research Institute Oslo, vol. 50(6), pages 721-736, November.
  36. Sasmal, Joydeb, 2011. "Distributive Politics, Nature Of Government Spending And Economic Growth In A Low Income Democracy," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 16(30), pages 31-49.
  37. Patrick James & Eric Solberg & Murray Wolfson, 1999. "An identified systemic model of the democracy-peace nexus," Defence and Peace Economics, Taylor & Francis Journals, vol. 10(1), pages 1-37.
  38. Farzanegan, Mohammad Reza, 2011. "Oil revenue shocks and government spending behavior in Iran," Energy Economics, Elsevier, vol. 33(6), pages 1055-1069.
  39. Mork, Knut Anton, 1989. "Oil and Macroeconomy When Prices Go Up and Down: An Extension of Hamilton's Results," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 740-44, June.
  40. Knut Anton Mork, 1994. "Business Cycles and the Oil Market," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 15-38.
  41. Plumper, Thomas & Martin, Christian W, 2003. " Democracy, Government Spending, and Economic Growth: A Political-Economic Explanation of the Barro-Effect," Public Choice, Springer, vol. 117(1-2), pages 27-50, October.
  42. Sims, Christopher A & Stock, James H & Watson, Mark W, 1990. "Inference in Linear Time Series Models with Some Unit Roots," Econometrica, Econometric Society, vol. 58(1), pages 113-44, January.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:mar:magkse:201403. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bernd Hayo)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.