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Investigating the effects of government debt on the poverty in Iran; with smooth transition regression (STR) approach

Document Type : Original Article

Authors

1 Researcher of Economic Affairs Research Institute, Ministry of Economic Affairs and Finance.

2 Member of the academic staff of the Research Institute of Economic Affairs, Ministry of Economic Affairs and Finance.

Abstract

in the present study, an attempt will be made to investigate this effect in the form of non-linear soft transfer regression methods during the period of 1991 to 2022 for Iran's economy. The results of the estimations showed that the primary effects of government debts on the poverty index were negative and significant, but the secondary effects were positive and significant, so the overall result showed that the increase in government debts led to an increase of 2.801 percentage will be in poverty. This issue is due to the fact that the government, by increasing its debts, makes spending policies difficult in terms of size and composition, then due to compensating these expenses, it also involves tax policies, which in the long run can make regulatory policies ineffective and lead to financial pressure on the middle class and the poor. Inflation rate and population growth in both regimes had positive and significant effects on poverty. Also, the effects of governance variables, human development and GDP growth in the first regime were positive on poverty, but in the second regime, these effects were negative and reduced poverty.

Keywords

Main Subjects

References
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Economic Policies and Research
Volume 3, Issue 1 - Serial Number 9
June 2024
Pages 62-89
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