Investigating the Effects of GovernmentFiscal Disequilibrium on the Private Sector Investment in Machinery and Building

Government fiscal disequillibrium are not due to a particular reason which can find a special solution for them. There are several issues which influence on the government fiscal disequilibrium, For example, government weaknesses in earning the government predicted incomes, leads to budget deficit. In this paper we argue about the effects of government fiscal disequillibrium on the private sector investment in machinery and building over the period of 1338-1380. In this regard, we focus on the budget deficit which is because of misallignment between revenues and expenditures of government. Therefore, we study this issue because generally in the majority of developing countries like Iran, governments face with budget deficit as a problem. In this study, we used two stage least square (2SLS) that is a type of simultaneous equation systems which is designed according to structural economical specifications of Iran. We find that increasing of government budget deficit will reduce the private investment in machinery sector and will raise the private investment in building sector.