Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73089
Authors: 
Farzanegan, Mohammad Reza
Year of Publication: 
2012
Series/Report no.: 
Joint Discussion Paper Series in Economics 23-2012
Abstract: 
Over the last decade, the Iranian government budget on military has been higher than the average of the world. The current increasing international sanctions aim to reduce the military capabilities and capacities of the Iranian government. We analyze the response of the Iranian economy to shocks in its military budget from 1959-2007, using Impulse Response Functions (IRF) and Variance Decomposition Analysis (VDA). The Granger causality results show that there is unidirectional causality from the military spending growth rate to the economic growth rate. The response of income growth to increasing shocks in the military budget is positive and statistically significant.
Subjects: 
Military spending
Economic growth
VAR model
Impulse Response
Sanctions
Iran
JEL: 
C22
H56
H50
Document Type: 
Working Paper

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