Important Factors of Iran Economic Growth by Considering the Effects of Increased Energy Prices

Economic growth is one of the most important goals of macroeconomics in current communities and its rate shows the rate of increase or reduction of GDP and improvement or reduction rate of welfare of people. This study evaluates the important factors of economic growth in Iran based on the effects of subsidy targeting plan. The study period is 1991-2012 and the study variables are including time series of Iran economy. After performing unit root test and evaluation of the stationary of variables based on Augmented Dickey-Fuller Test (ADF), the model coefficients are estimated by concurrent equations system and Two-Stage Least Square Method (2SLS) in Eviews software.
The study findings show that value added of various economic sectors has positive and significant impact on GDP and economic growth. As the government size is evaluated by government costs to GDP ratio, the coefficient of government expenditures variable is negative and significant at level 6% statistically. The coefficient of public level variable of prices is negative and significant and it shows that inflation phenomenon and increasing the price of energy carriers increase production costs in short-term and GDP growth rate is reduced. The elimination of paid subsidies to manufactures and increases of production costs of economic enterprises and serious economic sanctions reduce economic growth rate.