Political institutions and government spending behavior: theory and evidence from Iran

Sajjad F. Dizaji (), Mohammad Reza Farzanegan () and Alireza Naghavi
Additional contact information
Sajjad F. Dizaji: Tarbiat Modares University

International Tax and Public Finance, 2016, vol. 23, issue 3, No 5, 522-549

Abstract: Abstract This study examines how the quality of political institutions affects the distribution of the government budget in Iran. We first introduce a mechanism through which democracy can shift government expenditure from national defense (military) to productivity-enhancing public spending (e.g., education). Using impulse response functions and a variance decomposition analysis on the basis of a vector autoregressive (VAR) model, our results imply that the response of military spending to an improvement (a deterioration) of democratic institutions is negative (positive) and statistically significant, whereas that of education spending is positive (negative) and significant. Our results are robust to other indicators of political institutions, different orderings of variables in the VAR, and alternative specifications of government spending categories.

Keywords: Political institutions; Military spending; Education spending; Iran; VAR modeling (search for similar items in EconPapers)
JEL-codes: H11 H41 O43 O53 P16 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

Downloads: (external link)
http://link.springer.com/10.1007/s10797-015-9378-8 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Political Institutions and Government Spending Behavior: Theory and Evidence from Iran (2015)
Working Paper: Political Institutions and Government Spending Behavior: Theory and Evidence from Iran (2015)
Working Paper: Political Institutions and Government Spending Behavior: Theory and Evidence from Iran (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:itaxpf:v:23:y:2016:i:3:d:10.1007_s10797-015-9378-8

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/10797/PS2

DOI: 10.1007/s10797-015-9378-8

Access Statistics for this article

International Tax and Public Finance is currently edited by Ronald B. Davies and Kimberly Scharf

More articles in International Tax and Public Finance from Springer, International Institute of Public Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().