The impact of government expenditure on the overall economic growth and the growth of the Agricultural Sector in Iran Economic Growth in Iran

Considering the importance of the agriculture sector in Iran، this study investigated factors affecting economic growth and development of the agriculture sector in Iran over the period of 1967-2009 for short term and long term، using ARDL model. The results showed that the ratios of public investment expenditure to the GDP for short-term and long term have positive impacts on the economic growth. However، the dummy variables of revolution، war and the oil shock have negative effects on the economic growth. It is worth mentioning that in the short term the ratio of private investment expenditure to the GDP does not have a significant effect on the economic growth. Meanwhile، in the agricultural sector the ratio of private sector investment to the value added caused by the private sector has a positive effect on the agricultural growth. Furthermore، the ratio of the public sector investment to the value added، have positive effects on the agricultural growth. The employment rate، however، has a negative impact on the growth of the agriculture sector. Within a short-term، in the agricultural sector the ratio of private sector investment to the value added and the ratio of public sector investment to the value added، have positive. The dummy variable o war has a significant negative effect and the other variables have no significant effect. Error correction coefficient shows that the total effect of a government policy on the economic growth and the agricultural growth is observable in a short period of time. Ultimately، the economic growth in Iran is mainly nfluanced by the public setor nvestment the agricultural sector is mainly influenced by the private sector investment. A simultaneous development of public and private sector investment contributes to the total growth and the agricultural growth.