Assessing the effect of government infrastructure expenditure on income distribution in rural Iran: FAVAR Model

Document Type : Research Paper

Authors

• S Ebrahimi
• S.k Sadeghi
• M.B Beheshti
• R ranjpoor

Abstract

The role of rural area in food security, exports, GDP, employment and income, has led to implementation some programs to strengthen socio-economic infrastructures in order to reduce inequality and improve income distribution in rural areas. Investment in infrastructure is one of the appropriate mechanisms for the sustainable development of rural areas and to promote equitable distribution of income. In this paper, using FAVAR method and quarterly data for the period 1369:q1- 1393:q4 for 99 macroeconomic variable, the impact of government expenditure on the Gini coefficient in rural Iran have been investigated. Impulse response functions show that a positive shock of one standard deviation in government expenditure, reduce Gini coefficient and improving income distribution after 3 season. Also variance decomposition results show that after the four season, government expenditure have the most important role in the dynamics of rural Gini coefficient.

Keywords

• Government expenditure
• Rural income distribution
• FAVAR model
• Impulse Response Function

20.1001.1.20086407.1397.10.40.8.4

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