Identify the Main Determinants of Defense Budget in Iran through the Bayesian approach

The main objective of this study is to answer the question, which among the economic and social, strategic, political and military factors and Rents of natural resources, which one has played an important role in determining the defense budget of Iran during 1959-2015? For this purpose, have been used the 18 variables that effect on the defense budget contribution of GDP (defense burden index) according to theoretical foundations, empirical studies and structure of Iran. Bayesian Averaging of Classical Estimates (BACE) approach is used, due to convenience feature to consider the uncertainty assumption of model. With estimation of 40000 regressions and Bayesian averaging of coefficients, robust determinants of defense burden are specified. The results show that robust determinants of the defense budget in Iran were as follows: average the defense burden of world countries, average the defense burden of Middle East countries, share of oil and gas revenues from GDP, imposed war, lag of defense burden and defense burden of Israel. Based on these results can say that the more robust determinants of defense budget in Iran, were strategic and economic variables do not play a role in defining the defense budget.