The relationship between economic growth and government Expenditures from the perspective of Wagner's theory: Evidence of Nonlinear Approach in Iran's Economy

In recent decades, the relationship between economic growth and government spending has attracted the attention of many researchers to the point that it has led to many experimental studies in this field in developed and developing countries. The rising trend of government expenditure with high volatility in economic growth during the years after Islamic Revolution in Iran has created significant conditions that add to the need for a detailed study of this issue. This research is an attempt to study relation between the economic growth and government expenditure in Iran. In this regard, the empirical investigation of long-term and short-run relationships between the variables studied during the period 1969-2018 and using the nonlinear ARDL model in Iranian economy has been studied. The findings of this study showed that asymmetry was considered when examining the relationship between economic growth and government expenditures, so that the effect of negative and negative shocks of economic growth on government expenditures in the short and long run is asymmetrical. Results of the Granger's causality test showed that there is a one-way relationship from the side of economic growth to government expenditures, while this relationship is not in reversed. In other words, the results of this test confirm the Wagnerian approach and indicate that Keynesian law is not approved for the Iranian economy.