Achieving the Optimal Share of Government Expenditures in GDP with the Aim of Maximizing Social Welfare (with Emphasis on the Affairs and Chapters of the Government’s Public Budget)

Increasing the level of social welfare and providing the poor with discipline, security, education, health services, social security, increases the capacity of the economy in the areas of agriculture, water and electricity supply, industries and mines, business, energy, transportation, information technology. Meanwhile, the extent of government presence in how public policies are implemented plays a significant role in achieving inclusive social development.

The purpose of this study is to obtain the optimal share of government expenditures in economic, social and cultural, public, defense and security, and areas related to each of the matters with the aim of maximizing Social Welfare Index. In this regard, the threshold model and Simplex linear programming algorithm were used to estimate time series data during the period of 1971-2019.

The results showed that in order to achieve a higher level of social welfare, the share of government spending in GDP should be equal to 21.07%. Also, the share of public, defense, social, and economic affairs in GDP should reach the levels of 0.83, 2.7, 6.47, and 11.07 percent, respectively. Also, among the chapters, the share of education, information technology and energy with the highest priority should respectively be 4.05, 3.6 and 3.2% of GDP. Other chapters also have different effects in terms of sign and size on social welfare.

In the budgeting system of the country, the priority of allocating resources should be first in economic affairs with the emphasis on information technology and energy chapters and then in social affairs with emphasis on education chapter. Allocating the largest share to these matters and areas is due to their importance in the process of development, reducing poverty, and increasing social welfare.