Factors Determining Government Current Expenditures in Iran An Empirical Analysis

The purpose of the present paper is to determine factors affecting government current expenditures during 1338-1380. To do this, after reviewing the related literature and the necessary data published by Management and Planning Organization, the central Bank and Center for Iran’s Statistics. The ordinary least squares (OLS) method was applied to estimate the relevant regression models.The most important explanatory variables attended to in the present study are: inflation rate, rate of unemployment, the number of students, the population of the country, real and current GDP, taxes, oil revenues, exchange rate and the number of the civil servants. The estimated results of our regression models confirm positive and significant relationship between all explanatory variables and government current expenditures. It is also shown that population, rate of inflation, and the government employment have played most significant roles in that order.The study suggests that in order to alleviate the heavy burden of the government current expenditures, especially where there is no possibility of raising more revenue, private sector should be allowed to have more share in the economy and such affairs as education be undertaken by the private sector.