Investigating the Impact of Macroeconomic Instability on Private Investment in Iran

Macroeconomic instability can reduce the accumulation of physical capital and the efficiency of investment utility in economy. In this study, using the Auto Regressive Distributed Lagged (ARDL) model, we've evaluated the effects of instability in indicators of macroeconomic on private investment in Iran since 1981 to 2016. Variables used for this purpose are; inflation, government deficit ratio to GDP, balance of payments deficit ratio to GDP and real exchange rate. Here "instability" is the modular of each variables stable trend using the moving average method during four years. The Results indicate the positive impact of instability in government deficit ratio to GDP and the negative impacts of instability in inflation and in real exchange rate on private investment.