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

Mohadeseh Moghadasi (), Alireza Pourfaraj (), Ahmad Jafari Samimi () and Mohammad Ali Falahi ()
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Mohadeseh Moghadasi: Ph.D Student of Economics, Mazandaran University, Babolsar
Alireza Pourfaraj: Associate Professor of Economics, Mazandaran University, Babolsar
Ahmad Jafari Samimi: Professor of Economics, Mazandaran University, Babolsar
Mohammad Ali Falahi: Professor of Economics, Ferdowsi University of Mashhad, Mashhad

Quarterly Journal of Applied Theories of Economics, 2023, vol. 10, issue 2, 1-30

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

Keywords: Economic Growth; Operating Balance; Intergenerational loss; BVAR. (search for similar items in EconPapers)
JEL-codes: H61 Q11 Q32 (search for similar items in EconPapers)
Date: 2023
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