Institute for Management and Planning studies 2251-9092 9 2 2004 6 1 The Effect of Governments Current Expenditure Increase on the State Economic Growth in a Simple Economic Model 3 19 FA Mehdi Assali This paper tries to survey the relationship between national revenue growth with the governments current expenditure, which increases under the effect of the governments transfer payments composed of basic goods subsidies. The paper uses a dynamic two-sector equation that was formulated according to Irans economic structure characteristics. The solution of the model by way of reduced form equations for the important variables of the model such as Y (production), I (investment), and LD (demand for labor force) show that in the hypothesized situation of the economic model, the increase of the GC current budget leads to the decrease in production, investment, and labor demand. As this trend has been continuing during the past three decades, the results of this survey briefly express the necessity of revision in the methods of distributing subsidies and making them target-oriented with the aim of transferring them to low-income households and directing the financial resources of the country to investment. This becomes more crucial when it is viewed form the standpoint of the fourth development plans emphasis on the speedy economic growth and decrease of unemployment.

Institute for Management and Planning studies 2251-9092 9 2 2004 6 1 An Approach for Determining Optimum Size of Government (on the Basis of Governments Public Budget) 19 57 FA Aliakbar Gholizadeh In line with the unprecedented development of public sector in the 20th century, many economists have studied the efficiency of the public sector in economic growth and development. Evidently, one of the important aspects of these studies is to determine the optimum size of government whose theoretical principles and approaches as well as practical methods have been argued about in public sector economists forums. Although some studies relate fast economic growth of some countries including south east Asian countries to small mess of government size, empirical studies do not approve this hypothesis and fundamentally the sectoral studies that form the bases of these results do not enjoy strong scientific and applicable principles. Many economists believe that wise leadership of the government combined with organized support of the private sector are assumed the economic growth engine especially in the mentioned group of countries. The experiences of successful countries such as south east Asian ones indicate that fast economic growth is often the product of an efficient government and entrepreneurial private sector. Barro holds that the increase of government expenditure first reinforces economic growth and later decreases it in a certain point. So the optimum size of government is a relative variable that is under the effect of economic parameters, administrative system and organizational efficiency. This paper uses an economic criterion for the optimum size of government, i.e. government expenditure productivity. This criterion can be estimated in the framework of the production theory and the econometric model. The paper is composed of some parts. The first is introduction. The second one discusses economic growth and its resources. The cyclic fluctuations of GDP and factors affecting them are introduced in this part. It also discusses some important theories regarding the relationship between the size of government and the amount of productivity and economic growth among world countries. The third part briefly talks about the subject matter literature and the experiences of the countries. The fourth part is dedicated to methodology of the Model used and the applicational aspects. The fifth part explains estimation results and the final part contains summary, conclusions and policy recommendations.

Institute for Management and Planning studies 2251-9092 9 2 2004 6 1 A survey of Relationship Between the Independence of Central Bank and Inflation of Iran 59 93 FA Anoshiravan Taghipour Afsaneh Mousavi Azad Kasma'i This paper tries to survey the independence of Central Bank of Iran and its relationship to inflation by using the data of 56 developing countries during 1990s. The results signifies that there are no significant relationship between inflation and the independence of central banks in these countries. In other words, according to the existing evidences, not all the developing countries with high degrees of independence in their central banks have low levels of inflation and it depends on factors such as financial markets development level, national income structure and the way the country meets its budget deficit. According to the results of the survey and based on the prevalent income resources situations in Iran and the underdevelopment of finaneial markets of Iran, the independence of the central bank of Iran requires more studies and before everything, financial markets and governments budget structure reform should be addressed.