Effects of Government Investment in Energy Sector on Growth, Employment and Private Investment in Iran

Abbas Assari Arani, Raziyeh Mohammadi Saber, Lotfali Agheli


This research analyzes governmental investment effects in energy sector including subsectors of oil, gas and electricity on growth, private investment and employment in agriculture, industry and mining, and services during 1971-2013. We use vector autoregressive models in order to derive the response of variables, impulse response function and variance decomposition. The results indicate that governmental investment influence growth in agriculture, industries and mining, and services negatively but in median-term, it influences agriculture, and industries and mining positively. Effect of government investment is positive for private investment. In industries and mining sector, the relationship is positive in long term and negative in middle term.

Keywords: Energy Sector, Government Investment, Economic Growth, Employment, Private Investment, Vector Autoregressive Method

JEL Classifications: C01, O16, E24, 040, H54 

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