Investigating the Effects of The Specific Fiscal Policies to Reduce Regional Inequality in Iran: Spatial Econometric Approach

Document Type : Research Article

Authors

1 Associate Professor, Department of Economics, Faculty of Social Science, Razi University, Kermanshah, Iran.

2 PhD Student, Department of Economics, Faculty of Social science, Razi University, Kermanshah, Iran.

Abstract

Following the intensification of inequality in regions and its harmful effects such as irregular migration and evacuation of some regions, the government and parliament during 1990 onwards various structures in the five-year development plan and budget laws such as revenue-expenditure system, regional balance credits, two percent of the revenue from the sale of crude oil, etc. is intended to reduce the above inequality and create a balance between the regions of the country. Despite the passage of about twenty years of designing and compiling these structures, the results and the effectiveness of these measures have not been examined. Therefore, while identifying regional inequalities and their factors, it is necessary to examine the effects of the implementation of fiscal policies implemented over the past twenty years on regional inequality. This study seeks to examine the factors affecting regional inequality and identify the impact of specific government budget policies designed to reduce regional inequalities and implemented since the beginning of the Third Development Plan on regional inequality. For this purpose, statistics related to 31 provinces during the years 1990 in the form of spatial econometric model has been used. The results of the Spatial Durbin Model (SDM) indicate that the fiscal policies implemented over the past twenty years to reduce regional inequality have not had a significant impact on regional inequality. Therefore, it cannot be hoped that the continuation of this structure in the future can reduce inequality between regions. Changing this variable in a province not only has no significant effect on the inequality of that province but also has no significant effect on the inequality of other provinces. Therefore, this policy, have not had a significant effect in recent years and it is necessary to reconsider this policy. 

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References

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Journal of Applied Economics Studies in Iran
Volume 11, Issue 42
August 2022
Pages 171-194

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