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Empirical Analysis of Dynamic of Government Expenditures in Iranian Economy using a Framework on Standard Median Voter model and in the presence of Fiscal Illusion
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Majid Maddah   , Fozieh Jeyhoontabar * , Zohreh Rezapour |
| , jeyhoontabar@uk.ac.ir |
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Abstract: (6705 Views) |
| This paper analyzes public spending changes in the Iranian economy during the period 1360-1390 using the standard median voter model in which the median voter has fiscal illusion. In this regard, Autoregressive Distributed Lags (ARDL) model and multivariate cointegration methods have been used in order to test the median voter theorem. The results from estimated models indicate that public expenditure, oil revenues and share of taxes in government revenues cointegrated together and there is a long run equilibrium relationship among them. Also increasing share of taxes in government revenues doesn't have any effect on public expenditures because public expenditures considerably depend on oil revenues. Thus, tax payers have illusion fiscal. These findings show that in order to increase the efficiency of public sector in Iran, the dependence of budget to oil revenues should decrease and the share of tax revenues in government revenues should increase. |
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| Keywords: The Median Voter Theorem, Government Expenditures, Fiscal Illusion, Autoregressive Distributed Lags |
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Type of Study: Research |
Subject:
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