The Role of Business Cycles in the Impact of Government Expenditure Components on Income Distribution (MSAR Approach)

Ahmadvand, Narges; Alizadeh, Mohammad; Fotros, Mohammad Hassan; Delfan, Mahbobeh

doi:10.22054/joer.2022.63043.995

Document Type : Research Paper

Authors

¹ Ph.D. Candidate in Public Sector Economics, Lorestan University, Lorestan, Iran

² Associate Professor of Economics, Lorestan University, Lorestan, Iran

³ Professor of Economics, Bu- Ali Sina University, Hamedan, Iran

⁴ Assistant Professor of Economics, Lorestan University, Lorestan, Iran

https://doi.org/10.22054/joer.2022.63043.995

Abstract

The government expenditure in economic affairs can act as a tool for creating and sustaining development by improving income distribution. Therefore, prioritization and optimal allocation of economic expenditures of governments will be so important. In this regard, the present study has investigated the impact of government expenditure on economic sector and related sub-sectors (agriculture, industry and mining, trade, information technology, energy, housing, transportation, environment, cooperatives affairs, and water resources) on income distribution in Iran's economy during business cycles. In this study, Markov Switching Auto Regressive model (MSAR) has been used to estimate time-series data during the time period between 1973 to 2019. The result of the study indicates that economic sector and agricultural, water resources and transportation subsectors during business cycles, “housing, trade, and cooperative affairs” subsectors during the boom periods, and the environment subsector during the recession periods have reduced income inequality significantly. Also, the government expenditure in industrial, mining, and energy subsectors during business cycles and information technology subsector during the boom periods have increased income inequality significantly. Finally, the subsectors of agricultural, water, industry and mining, commerce and cooperation, transportation have been more stable in the recession regime. Meanwhile, the economic sector and subsectors of information technology, housing and development, environment and energy have been more stable in the boom regime. Therefore, the components of government expenditure on income distribution have asymmetric behavior.

Keywords

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Economics Research

The Role of Business Cycles in the Impact of Government Expenditure Components on Income Distribution (MSAR Approach)

References

References

Volume 21, Issue 82 - Serial Number 3
October 2021
Pages 91-128

The Role of Business Cycles in the Impact of Government Expenditure Components on Income Distribution (MSAR Approach)

References

References

Volume 21, Issue 82 - Serial Number 3October 2021Pages 91-128

Volume 21, Issue 82 - Serial Number 3
October 2021
Pages 91-128