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Nariman Mohammadi; Gholamali Haji; Mohamad Hassan Fotros
Abstract
In recent decades, fiscal decentralization as one of the most important factors affecting growth and improve productivity in the economy and balance of the regional more than ever is underlined by economists. The purpose of this study is to investigate the impact of fiscal decentralization on economic ...
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In recent decades, fiscal decentralization as one of the most important factors affecting growth and improve productivity in the economy and balance of the regional more than ever is underlined by economists. The purpose of this study is to investigate the impact of fiscal decentralization on economic growth in provinces of iran from a different angle and specifically based on the principal components analysis (PCA) using econometrics method of panel data in the period of 2004 -2015. The model based on the endogenous growth of this research was estimated based on Mean Group (MG), Poold Mean Group (PMG) and Fixed Effect Dynomic (FED) estimators, and a suitable pattern is determined using the Hausman test. By executing of panel co- integration tests, long- term relationships in terms of cross-sectional approach through fuly-Modified Ordinary Least Square (FMOLS) and Dynomic Ordinary Least Square (DOLS) estimation methods has extracted and then, causality relations have investigated using the vector error correction approach (ECA). the findings of this study, based on data of 31 provinces of the country, show the positive effect of combined financial decentralization as a result of PCA technique on economic growth and the existence of a nonlinear relationship and the optimum level between combined fisical decentralization index and regional economic growth, so that this relationship with increasing combined fiscal decentralization is positive at low evels, and will be negative due to the costs of decentralization after crossing the peak point. Also, the long- term causality relation from independent variables, especially fiscal decentralization and it's squaring on production, is confirmed.
