Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/123143
Authors: 
Dizaji, Sajjad Faraji
Farzanegan, Mohammad Reza
Naghavi, Alireza
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5505
Abstract: 
This study examines how the quality of political institutions affects the distribution of the government budget in Iran. We first introduce a mechanism through which democracy can shift government expenditure from national defense (military) to productivity-enhancing public spending (e.g., education). Using impulse response functions (IRF) and a variance decomposition analysis (VDC) on the basis of a vector autoregressive (VAR) model, our results imply that the response of military spending to an improvement (a deterioration) of democratic institutions is negative (positive) and statistically significant, whereas that of education spending is positive (negative) and significant. Our results are robust to other indicators of political institutions, different orderings of variables in the VAR and alternative specifications of government spending categories.
Subjects: 
political institutions
military spending
education spending
Iran
VAR modeling
JEL: 
H11
H41
P16
O53
O43
Document Type: 
Working Paper

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