The Estimation of the Private Investment Function A Case Study of Iran

Abstract

This study estimates the relationship between the private sector investment as dependent variable with GDP and the government current expenditures as independents variables in Iran Country covering data 1986 to 2110. The survey uses the annual time series data which is obtained from the website of Central Bank. The Cobb-Douglas function is applied to estimate the relationship between the variables using EVIEWS8 and SPSS software which it involves OLS method. The findings of the paper show in the short run during the years of the study the coefficients of the natural logarithm of the real Gross National Product without oil and the natural logarithm of the government current expenditures in Iran are 2.485588 and-0.957794, respectively. Hence the government current expenditures play a main determining for the private sector investment but this role is negative means that the government current expenditures is a substitution for the private sector investment in Iran. It is possible to take a better decision for management of the society in order to increasing of economics growth rate using the survey results by the decision makers in Iran.