The nonlinear effect of government debt on private investment using the smooth transition regression (STR) model in the Iranian economy

Document Type : Research Paper

Authors

1 Assistant Professor, Department of Economics, Faculty of Humanities, Khatam University

2 PhD. Institute of Management Education and Research and Planning

3 MA Khatam University

Abstract

abstract of the article:
The issue of the budget deficit and its aggregation in the form of debt accumulation has always been a concern in scientific and policy circles. The accumulation of government debt can affect investment and thus economic growth, and this effect can vary in different economic conditions. The purpose of this paper is to investigate the relationship between government debt and private sector investment with emphasis on the effect of debt accumulation in this regard. The results of this model show that, firstly, the relationship between government debt and private sector investment is negative, and secondly, as government debt increases, the impact of government debt on private sector investment decreases. Therefore, enlarging the government at the expense of increasing borrowing cannot have a positive effect on the activities of the private sector. Also, the impact factor of inflation and oil revenues on private sector investment is negative and positive, respectively, and the impact factor of both is significant. In addition, all good fit tests in the model were examined. The results of the studies showed that the model is reliable in terms of these tests.
Keywords: Government Debt, Private Sector Investment, Smooth Transition Regression Model
JEL: H50 ، E22، ، H62

Keywords

References

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new economy and trad
Volume 16, Issue 4
March 2022
Pages 43-67

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History

  • Receive Date: 04 June 2021
  • Revise Date: 14 October 2021
  • Accept Date: 10 December 2021

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