The Impact of Corruption on the Allocation of Public Expenditure to the Defense Sector in Iran

The main objective of this paper is to investigate the effect of corruption on the allocation of public expenditures to the defense sector in Iran during the period of 1984-2015. To achieve the above objective is used a general model of defense expenditures, corruption index, bond Co integration test and Auto Regressive Distributed Lag (ARDL) estimator. Results of this study show that the long-term and short-term effects of corruption on the share of defense expenditure from total public expenditures is positive and significant and the spread of corruption leads to the transfer of public expenditures from the non-defense sector to the defense sector.The main objective of this paper is to investigate the effect of corruption on the allocation of public expenditures to the defense sector in Iran during the period of 1984-2015. To achieve the above objective is used a general model of defense expenditures, corruption index, bond Co integration test and Auto Regressive Distributed Lag (ARDL) estimator. Results of this study show that the long-term and short-term effects of corruption on the share of defense expenditure from total public expenditures is positive and significant and the spread of corruption leads to the transfer of public expenditures from the non-defense sector to the defense sector.