Analyzing income distribution effect on agricultural sector growth: A nonlinear Panel ARDL Approach

According to new literature, improving income distribution leads to economic growth. Considering this issue and the importance of agriculture sector in the economy, in this study, the impact of rural income distribution on agricultural sector’s growth has been analyzed dynamically and nonlinearly in Iran's provinces during the period of 2007-2016. For this, after confirming the existence of a long-run asymmetric equilibrium relationship, auto regression model with non-linear distributional lags was used to analyze the asymmetric effects. The result showed that the positive shocks of rural income inequality have a positive effect on agricultural growth in the long and short run. Also The negative shocks of rural income inequality have a negative effect in the short run and a positive effect on agricultural sector’s growth in the long run. According to the results, the effect of positive shocks is more than the negative shocks, which indicates the positive effect of income inequality on agricultural growth and the results are consistent with the old literature. In addition, the results showed that in the short and long run, the effect of consumer price index and government spending on agricultural growth was negative and positive, respectively. Also, the effect of tax on agricultural growth is positive in the short run and negative in the long run.