Determinants of Private investment in Iran: Using A Vector Autoregression Approach

Abstract

This paper investigates the determinants of private investment in Iran over the period of 1382-2004. First, the variables are tested for unit root and then the long run private investment equation is estimated using cointegration technique. The variables considered in the model include GDP, government investment, inflation, infrastructure and institutions such as rules and regulations, property rights, corruption and social Securities. The results indicate that GDP and infrastructure positively affect private investment while the institution factors such as rules and regulations, property rights, social securities and corruptions negatively affect private investment.

Keywords

• iran
• cointegration
• macroeconomic variables
• private investment