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Political Institutions and Government Spending Behavior: Theory and Evidence from Iran

S. F. Dizaji, Mohammad Reza Farzanegan and Alireza Naghavi

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: This study examines how quality of political institutions affects the distribution of government budget in Iran. We first introduce a mechanism through which this can shift government expenditure from patronage to more constructive public spending. Using impulse response functions (IRF) and variance decomposition analysis (VDC) on the basis of Vector Autoregressive (VAR) model, our results imply that a positive shock towards more democratic institutions leads to negative and statistically significant response of military spending and positive and statistically significant response of education expenditures. Our results are robust to different political institutional quality indicators, ordering of variables in the VAR and different specifications of government spending categories.

JEL-codes: H11 H41 O43 O53 P16 (search for similar items in EconPapers)
Date: 2015-01
New Economics Papers: this item is included in nep-ara, nep-cwa and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Political institutions and government spending behavior: theory and evidence from Iran (2016) Downloads
Working Paper: Political Institutions and Government Spending Behavior: Theory and Evidence from Iran (2015) Downloads
Working Paper: Political Institutions and Government Spending Behavior: Theory and Evidence from Iran (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:wp986

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