Payame Noor University Economic Growth and Development Research 2228-5954 10 37 2019 12 22 Studying the Effect of Government Expenditure Shock on Economic Growth in Iran and MENA Selected Countries through Estimation of Government Expenditure Multiplier Studying the Effect of Government Expenditure Shock on Economic Growth in Iran and MENA Selected Countries through Estimation of Government Expenditure Multiplier 87 110 5903 10.30473/egdr.2019.46121.5195 FA Mahnaz Hoseinpur Assistant Professor of Economics, Islamic Azad University, South Tehran Branch, Tehran, Iran Kambiz Hojabr Kiani Professor of Economics and Faculty Member of Islamic Azad University, Tehran, Iran Fatemeh Zandi Assistant Professor of Economics, Islamic Azad University, South Tehran Branch, Tehran, Iran Ali Dehghani Assistant Professor of Economics, Islamic Azad University, South Tehran Branch, Tehran, Iran Khalil Saeedi Assistant Professor of Economics, Islamic Azad University, South Tehran Branch, Tehran, Iran Journal Article 2019 05 11 In this paper, firstly, the impact of government expenditure on economic growth in Iran (1980-2016) and MENA countries (2000-2016) is investigated using VAR and PVAR models. Further, the government expenditure multiplier are calculated and compared comparatively using the impulse response functions of each model. At the end, the effect of each factor is investigated determining the government expenditure multiplier in separate models for Iran and selected countries of the MENA for a better analysis and a closer investigation of the subject. According to the literature, results indicate that: Firstly, the shock of government expenditure in MENA selected countries and Iran, together, led to a relatively strong increase in economic growth. Secondly, in developing countries such as the countries of MENA region, especially in Iran, government- expenditure multipliers were smaller than one and close to zero. The government expenditure multiplier in MENA selected countries is more than Iran in short-term, but in the long run, the government expenditure mulitiplier, in Iran is larger than MENA selected countries. Thirdly, trade openness, public debt, and savings rate both in MENA and in Iran reduce the government expenditure multiplier, but unemployment and financial development increase the multiplier. Public debt has the most impact on the Iranian government expenditure multiplier and trade openness has the most impact in MENA expenditure multiplier. In this paper, firstly, the impact of government expenditure on economic growth in Iran (1980-2016) and MENA countries (2000-2016) is investigated using VAR and PVAR models. Further, the government expenditure multiplier are calculated and compared comparatively using the impulse response functions of each model. At the end, the effect of each factor is investigated determining the government expenditure multiplier in separate models for Iran and selected countries of the MENA for a better analysis and a closer investigation of the subject. According to the literature, results indicate that: Firstly, the shock of government expenditure in MENA selected countries and Iran, together, led to a relatively strong increase in economic growth. Secondly, in developing countries such as the countries of MENA region, especially in Iran, government- expenditure multipliers were smaller than one and close to zero. The government expenditure multiplier in MENA selected countries is more than Iran in short-term, but in the long run, the government expenditure mulitiplier, in Iran is larger than MENA selected countries. Thirdly, trade openness, public debt, and savings rate both in MENA and in Iran reduce the government expenditure multiplier, but unemployment and financial development increase the multiplier. Public debt has the most impact on the Iranian government expenditure multiplier and trade openness has the most impact in MENA expenditure multiplier.

https://egdr.journals.pnu.ac.ir/article_5903_c98a733e5c8e71daeeb8b5fc5a600d57.pdf