Analyzing the Role of Public and Private Investment in Non-oil Production in Iran

Investment is a major production factor in the long-run. This study investigates the effect of public and private investments on non-oil GDP in an asymmetric framework during the period of 1971-2016. The results of estimation by autoregressive distributed lags (ARDL) method show that public and private investment have positive effects on non-oil GDP in both the short- and long-run. The estimation results by non—linear autoregressive distributed lags (NARDL) method indicate that the effects of public and private investment are asymmetric in the short and long-run. So that, increases in public investment directly affect non-oil production, but decreases in public investment have no significant effect on non-oil production. In addition, increases and decreases in private investment have direct effects (but different in size) on non-oil production. Accordingly, there is a direct relationship between private investment and non-oil production. However, the direct relation between public investment and non-oil production holds only if public investment increases. The consumer price index in linear and non-linear approaches has positive effect on non-oil production in the short- and long-run, but oil production has no significant effect on non-oil production