The Relationship between Government Size and Economic Growth in Iran; Bivariate and Trivariate Causality Testing
Salma Keshtkaran and
Farzane Bagheri
Journal of Economics and Behavioral Studies, 2012, vol. 4, issue 5, 268-276
Abstract:
The aim of this study is to demonstrate the relationship between government size and economic growth in Iran within bivariate and trivariate causality framework. For this purpose, Vector Auto Regressive Model, Johansen Test and Auto Regressive Distributed Lag Model were used for analyzing the long run relationship, whereas Error Correction Model was considered for the short run. Moreover Wald Coefficient was used for bivariate and trivariate causality test. The results show that the relationship between government size and economic growth in Iran is negative. Furthermore there is a one-way causality relationship for the long run and the short run-from government size to economic growth. Inclusion of unemployment and oil revenue (separately) as the third variable causes the relationship to remain negative. However the direction of causality depends on the choice of the third variable. If unemployment rate is considered as the third variable instead, there will be no causality between the two variables in the long run. Although in the short run government size is still the cause of economic growth. However, consideration of oil revenue as the third variable results in a two-way causality relationship between the government size and the economic growth in the long run and the short run.
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://ojs.amhinternational.com/index.php/jebs/article/view/327/327 (application/pdf)
https://ojs.amhinternational.com/index.php/jebs/article/view/327 (text/html)
Related works:
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:rnd:arjebs:v:4:y:2012:i:5:p:268-276
DOI: 10.22610/jebs.v4i5.327
Access Statistics for this article
More articles in Journal of Economics and Behavioral Studies from AMH International
Bibliographic data for series maintained by Muhammad Tayyab ().