Asymmetric Effects of Government Spending on Economic Growth Over the Business Cycle: Application of Markov Switching Models

Authors
elnaz entezar
mina najafi
Islamic Azad University of Urmia
10.52547/jde.2.7.115
Abstract
This paper is investigated four subject with uses iranian economic data and using the Markov-Switching model during the period (1369: 3-1393: 4), So that: (a) were Examined impact of the positive and negative Fiscal shocks on Iran economic growth ( B) the Hypothesis impact of negative shocks is greater than a positive shock was tested. (C) were tested the impact of government expenditure (fiscal policy multiplier) on economic growth during the recession is greater than the boom period.( d) was determined property of cyclical or counter-cyclical fiscal policy aspects of government spending.The results of Markov switching model revealed that the impact of positive shocks on growth in boom is positive and the recession is negative also the impact of negative shocks on growth in boom is negative and the recession is positive .As well as the Hypothesis of effects a negative shock is larger than a positive shock in the iranian economy can not be rejected.The nature of government spending in iran economy is cyclical.The remain probability of regime one is 49 percent and The remain probability of regime two is 39 percent.The regime with negative growth (recession) more stable than the boom regime , in Iran's economy.
Keywords
Government spending shocks
Markov-Switching model
Business Cycles
Procyclical policy
Government Debt
Multiplier
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