The Relationship between Risk and Private Investment in Iran

In every country, investment is subject to a set of variables that the investment security is one of the most important of them. In this article, private investment variable in Iran has been estimated to study the effect of security on private investment. In order to estimate the investment risk, the composite risk index has been used, which is annually prepared by the IBC Institute. The research was conducted for the time span of 1984 – 2005 using the Vector Autoregressive (VAR) Model through Johansen - Joselius Method. The results suggested that investment security could have a significant effect on private investment in Iran, so that a unit of investment risk increase might decrease the private investment for 0.22 billion Rials in average.