The economic uncertainty and private investment nexus in Iran： Application of the EGARCH model and the ARDL approach

This paper examines the impact of economic uncertainty on private investment in lran. In addition, the authors also examine the impact of other economic factors on the level of private investment. The Autoregressive Distributed Lag （ARDL） approach is applied to investigate the relationship of these variables. The data span is from 1975 to 2007. The results indicate that economic uncertainty has a significant negative effect on private investment. Public investment and the availability of financing have a significant positive effect on private investment, while the impact of output gap and the exchange rate is negative. Hence, government should aim at creating a stable macro-economic environment in order to makes private investment attractive.