The Optimal Share of Property Rights Protection Expenditure in Total Government Spending: The Case of Iran

Document Type: Research Paper


1 Professor of Economics in Shiraz University

2 Ph.D Student in Shiraz University


The main purpose of this paper is to obtain the optimal amount of expenses of government relating to the protection of property rights (PPRs). To achieve these purposes we have introduced concept of social intelligence with respect to PPRs and then developed different growth model from existing literature. In the second step the optimal share of government spending on the PPRs is calculated.  The theoretical results show inverse relationship between budget deficits and government spending in the PPRs. In other words, with increasing amount of government deficit, government reduced spending of PPRs.  The results of calibration for Iranian economy show that, the growth rate of spending to PPRs should be equal to 31 percent for having sustainable economic growth rate of 6 percent.


Abdoli, Ghahraman (2009). An estimation of discount rate for Iran. Journal of Economic Research, 9.3,  135-186

Anderson, J. E., & Bandiera, O. (2005).  Private enforcement and social efficiency.  Journal of Development Economics, 77, 341-366.

Baier, S. L., & Glomm,  G. (2001). Long run growth and welfare effects of public policies with distortionry taxation. Journal of Economic Dynamics & Control, 25, 2007-2042.

Central Bank of Islamic Republic of Iran, Economic report, multiple years.

Chang, W. -Y. (1999), Government spending, endogenous labor, and capital accumulation. Journal of Economic Dynamics & Control, 23, 1225-1242.

Dincer, O. C., & Ellis, C.J. (2005). Predation, protection, and accumulation: Endogenous property rights in an overlapping generations (OLG) growth model. International Tax and Public Finance, 12, 435-455.

Gonzales, F. M. (2007). Effective property rights, conflict and growth. Journal of Economic Theory, [In press].

Gradstein, M. (2004). Governance and growth. Journal of Development Economics, 73, 505-518.

Grossman, H. I., & Kim, M. (1996). Predation and accumulation. Journal of Economic Growth, Vol.1, pp. 333-350.

Iran’s center of statistics, Iran’s annuals of statistics, multiple years

Lindner I., & Strulik, H. (2004). Why not Africa? – Growth and welfare effects of secure property rights.  Public Choice, Vol.120, No.1/2, pp.143-167.

Mino, K. (2006). Voracity vs. scale effect in a growing economy without secure property rights.  Economic Letters, Vol.93, pp.278-284.

Palda, F. (1999). Property rights vs. redistribution: which path to national wealth?  Public Choice, Vol.101, pp.129-145.

Rennani, M., Dallali Isfahan, L., & Samadi, A.H. (2008). Property rights and economic growth: An endogenous growth model. Tahgheghat- Eghtesadi, Vol 43, No. 85, pp. 175-206

Samadi, A. H., & Oujimehr, S. (2012).  Evaluation of nature and equivalency of fiscal policy in IRAN (1979-2007).  Biquarterly Journal of Economic Essay, Vol.6, No. 16, pp. 49-76.

Svensson, J. (1998).  Investment, property rights and political instability: theory and evidence. European Economic Review, 42, 1317-1341.

Sylwester, K. (2001).  A Model of institutional formation within a rent seeking environment. Journal of Economic Behavior & Organization, 44, 169-176.

Teng, J. (2000).  Endogenous authoritarian property rights.  Journal of Public Economics, 77, 81-95.

Tornell, A.,  & Velasco, A. (1992). The Tragedy of commons and economic growth: why does capital flow from poor to rich countries? Journal of Political Economy, 100, 6, 1208-1231.

Tornell, A., & Lane, P. R. (1999). The voracity effect. The American Economic Review, 89, 1, 22-46.

Turnovsky, S. J. (2000). Fiscal policy, elastic labor supply, and endogenous growth.  Journal of Monetary Economics, 45, 185-210.