Document Type : Research Paper
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Abstract
Abstract
This paper studies the relationship between economic growth and government size using ARDL and Bounds test approach during 1346-1392. In contrast with other studies which have concentrated on accepting or rejecting the Army Curve (an inverted U shape or quadratic curve that relates government expenditure and GDP growth) in Iran, the results of this paper shows that GDP growth and government expenditure have cubic relationship. This functional form, which has been introduced by Anaman(2004) for the first time, shows that the relation between economic growth and government size are negative for low and high level of government size both in the short-run and long-run while the relationship between economic growth and government size are positive for medium level of government expenditure both in the short-run and long-run.
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