چکیده:
has been the subject of long debates between pros and cons in allmajor schools of Economics. According to Classical extremists,government expenditure has no effect on GDP due to complete crowding out between government expenditure and investment. This isvehemently rejected by radical Keynesians that assert a fiscal expansionpolicy affects GDP in full. In this paper we will study government expenditure effects on GDP and employment by a CGE model. It will beshown efficiency of government expenditure depends on kind ofexpenditure. The present paper divides government expenditures into two categories, consumption and investment expenditure. Alsoinvestment expenditure has been studied in five sectors: agricultural, gasand oil, construction, industry and mineral and service. The results confirm that government expenditure influences on economy in differentways, depends on types of costs. Increasing the government consumption expenditure causes reduction in production, employment and investment. Government investment expenditure has differenteffects on economy that depends on which area they will be spent.
خلاصه ماشینی:
Computable general equilibrium models define a set of institutions (households, firms, sectors, government or the whole world) and a set of markets, and then, assured of considering definitions of macroeconomic standard, a set of supply and demand relationships for each market are defined.
Institution of economic research of Iran, Bank of data and papers of Iran’s economy 5- Discussing Scenarios Using represented general equilibrium model, the impacts of variation in government expenditure on production, private investment and employment in different economic sectors are going to be studied as follows.
The advantage of using represented general equilibrium model in order to study the effects of government expenditure on economic variables, is that, although the results of enforcing this policy is observable on GDP, you are able to recognize them on labor force market, too .
To examine the effects of increasing the government consumption expenditure, using a general equilibrium model frame work; income effect and substitution effect, result from enforcing this policy, would be discussed.
In brief , income effect , results from government expenditure are increase in domestic demand , import , income of households and firms , taxes , demand for intermediate and trade commodities , transaction demand for money , capital output , exchange rate and domestic price, employment ;and decrease in investment .
As a result, substitution effect of government expenditure increase leads to deduction in demand, production, employment, income of households and firms, import and money transactional demand.
Total effect of government expenditure increase on demand, domestic production, employment, and households’ income and expenditure, depends on income elasticity and price elasticity.