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The world is changing at a rapid pace and our viewpoint too. Moreover, the impact of government policy on social and economic growth is changing at the same pace. Many researchers have attempted to estimate the impact of government expenditures on economic growth. In this regard, they have used either a particular statistical model or Ram’s model (1986) employing a production function which criticized because of statistical limitations. The purpose of this article is to introduce an alternative theoretical framework based on the conventional demand theory applied by Bairam (1990). The annual time series data from 1974 to 2005 is employed to examine the effect of government size on economic growth in Iran. The empirical findings indicate that the government expenditures have a positive effect on economic growth which is consistent with the theory used in this paper and also it is in harmony with the empirical results of the similar studies.

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Economic theories suggest that increasing uncertainty induces households to reduce the growth of their consumption expenditure. This study aims to examine how to change the consumption expenditure of Iranian households due to uncertainty in government expenditure. To do this, using annual data for 1978-2012, first, a measure for government expenditure uncertainty was introduced, and then its effects on household consumption behavior were analyzed. The results indicate that uncertainty in government expenditure has a negative and significant effect on growth of household consumption expenditure. On the other hand, the effect of government spending uncertainty on consumption expenditure of durable goods is positive. In other words, Iranian households in increasing uncertainty settings face with the growth of consumption spending on durable goods. Thus, the government needs to create transparency in fiscal policy, to reduce policy uncertainty for households as far as possible.

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With regard to the role of fiscal policy in reducing the financial crises, determining the magnitude of the fiscal policy multiplier after the 2007-2008 global crisis became one of the most challenging issues in the field of fiscal policy. In general, the magnitude of the fiscal policy multiplier is estimated larger than one according to the Keynesian viewpoint and smaller than one based on neoclassical viewpoint. The difference in the magnitude of the multiplier comes from the fact that economists believe that the fiscal policy multiplier is influenced by the degree of economic openness, the exchange rate regime, the way monetary policy is applied and the business cycle. Differences about the magnitude of the fiscal policy multiplier among schools of economic thought are evident in both theoretical and empirical dimensions. In this regard, this paper tries to estimate fiscal policy multiplier using structural vector autoregressive model (Blanchard and Peroti, 2002 method and Markov switching approach (Hall, 2009) using the seasonal data for Iran during the period (1990: 1-2017:3). The results of the structural vector autoregressive model showed that the instantaneous multiplier, 10-quarter cumulative multiplier, and the 20-quarter cumulative multiplier of the government expenditure were equal to 0.281, 0.304, and 0.445, respectively. In addition, the corresponding multipliers for taxes were -0. 079, - 0.107 and - 0.171, respectively. Since the fiscal policy multiplier varies based on the economic conditions, the results of the nonlinear Markov switching model showed that the government expenditure multiplier during the recession is 0.828 and it is larger than the same coefficient during the boom period (0.108), on one hand. On the other hand, the tax multiplier during the boom period (-0.194) is larger than its value during the period of recession (-0.092 ).
 

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This study attempts to investigate the effect of government spending on regional growth in Iran. The relationship between government spending and economic growth is one of the well-known topics in economic literature. One of the problems of developing countries is the failure to achieve sustainable economic growth, which not only causes economic problems such as recession and unemployment, but also cultural, political and social problems. The government economic stabilization policies can be used to narrow the gap between the potential and realized product and to maintain the product near its potential level. One key issue in the field of regional planning is to study and understand the geographical inequalities in different dimensions.  In this paper, using the spatial econometric method, the relationship between government spending and regional growth is estimated by applying the regional data of Statistical Center of Iran during 2001-2017, and Excel and R software’s are used to perform the calculations. This study seeks to explain the growth of different regions using government spending, and to answer these questions:  Does government spending have a significant effect on growth in the regions? Do the regions converge in terms of economic growth over time? The results indicate the negative effect of government spending, population growth and human capital on regional growth in Iran. In addition, the statistical significance of spatial correlation coefficient indicates the positive diffusion effects of regional economic growth.