A study on the efficiency of government spending, optimal fiscal policy and indigenous economic growth in Iran economy
The optimal combination of the government current and capital expenditures is very important from the aspect of influencing on the optimal economic growth, so that lack of attention to the type of government spending leads to inefficiency of the government fiscal policies and failure to achieve the high-valued objectives of economy. In the present study, we used the production function and considering efficiency of the government current and capital expenditures to evaluate their effects on the optimal economic growth. Then, we proposed appropriate policy recommendations. To this aim, we used the modified Devarajan’s model (1998) and vector error correction model for 1966-2013 time-series data. The results show that current and capital expenditures had respectively positive and negative effects on the optimal economic growth. In other words, in Iranian economy, current expenditures are more efficient than capital expenditures. This is in contradiction to the ideas about high efficiency of capital expenditures. The reason for this is the Iranian economy structure and the nature of government current and capital expenditures. So that capital expenditures despite accounting classification, have a non-development nature. This is because of low contribution of economic issues in capital expenditures and high contribution of economic issues in current expenditures. Moreover, due to non-flexibility of current expenditures over 70%, adopted current credits are allocated practically and only 10-30% of development credits are allocated. Selection of economic sectors for development expenditures is inefficient while, current expenditures leads to economic growth by creating real demand in the market.
The Author(s) must make formal transfer of copyright for each article prior to publication in the International Journal of Contemporary Economics and Administrative Sciences. Such transfer enables the Journal to defend itself against plagiarism and other forms of copyright infringement. Your cooperation is appreciated. You agree that copyright of your article to be published in the International Journal of Contemporary Economics and Administrative Sciences is hereby transferred, throughout the World and for the full term and all extensions and renewals thereof, to International Journal of Contemporary Economics and Administrative Sciences.
The Author(s) reserve(s): (a) the trademark rights and patent rights, if any, and (b) the right to use all or part of the information contained in this article in future, non-commercial works of the Author's own, or, if the article is a "work-for-hire" and made within the scope of the Author's employment, the employer may use all or part of the information contained in this article for intra-company use, provided the usual acknowledgements are given regarding copyright notice and reference to the original publication.
The Author(s) warrant(s) that the article is Author's original work, and has not been published before. If excerpts from copyrighted works are included, the Author will obtain written permission from the copyright owners and shall credit the sources in the article. The author also warrants that the article contains no libelous or unlawful statements, and does not infringe on the rights of others. If the article was prepared jointly with other Author(s), the Author agrees to inform the co-Author(s) of the terms of the copyright transfer and to sign on their behalf; or in the case of a "work-for-hire" the employer or an authorized representative of the employer.
The journal is registered with the ISSN : 1925-4423.
IJCEAS is licensed under a Creative Commons Attribution 4.0 International License.
This license lets others distribute, remix, tweak, and build upon your work, even commercially, as long as they credit you for the original creation. This is the most accommodating of licenses offered. Recommended for maximum dissemination and use of licensed materials.