Abstract

In this paper, balance relation and the long term of five variables (gross domestic product, private investment, public investment, external debt and imports) and also their influences on each other in Iran for the period of 1974 to 2007, were analyzed. As such, the vector autoregressive model (var) was used. First, stability of variables by the use of dickey-fuller test was examined, after which analysis of Johnson test for considering the convergence among five variables was used. The results of this research showed that the external debt had a negative effect on gross domestic product and private investment. Also, public investment had a positive relation with private investment.

Key words: External debt, private investment, government investment, growth economy, vector autoregressive model (VAR).