estimation of private investment function in iran’s industrial sector (1971-1998): cointegration method

investment, as the engine of economic growth and development is considered dramatically important wordwide. this research paper studies private investment in one of the outstanding economic sectors of the country i.e. industry. it evaluates and analyzes its private investment function. the paper uses cointegration technique in its study. the degree of integration for all the variable used in the model were examined by static test and they had the same integration equal to unity. the model that is made by this method has long-run stability and does not suffer from false regression problem. after examining the long – run model, the paper analyses the short-run one and compares the two as well. the results of examining private investment function in iran’s industry sector shows positive impacts of industry value-added variables in industry sector as well as those of the balance of facilities granted to the sector. however, governmental investment in industry sector and the occurance of the revolution have negative impacts that indicate the involvement of the government in the operational fields of industry sector investment. foreign exchange and inflation rates are added to the model while estimating the short-run function.