Examining the Relationship between Income Distribution and Government Consumption Expenditure

Recently, Inequality and unequal distribution has been of a great importance to economists. In the present study, the main question is that whether or not there is a significant relationship between the variable income distribution and government consumption expenditures? In the observing model, does the virtual war variable make sense in government consumption expenditure and income distribution? This study, with regard to the virtual war variable, examines the relationship between income distribution and government consumption expenditure during the 1389-1357. In order to estimate this relationship between Ma and Koenker(2006) model, a system of simultaneous equations and a three-stage least squares method is used. Besides, the tests used in this study are the unit root test of P hillips – Perron. According to the estimation results, the estimated coefficient of government consumption expenditure is approximately – 0.042. The first model represents that there is a logical relationship between virtual war variable for income distribution and income distribution variable.