Impact of Savings and Investment on Iran's Economic Growth in the presence of Structural Break

The purpose of this paper is to examine the long-run relationship between saving and investment on Iran`s economic growth, with emphasis on the structural breaks during 1960-2016. To achieve this goal, the Zivot & Andrews unit root tests are used for determining the endogenous structural changes and comparing traditional cointegration test Engle-Granger and in absence of the structural breaks with Gregory-Hansen and Saikkonen & Lutkepohl in the presence of the structural breaks. This article differs with other studies in Iranian economy for three reasons: attention to the long-run effects saving and investment have on economic growth in the form a multivariate model, attention to structural breaks in unit root test and cointegration tests, and estimating endogenous break point. Cointegration tests results in absence of structural breaks indicate that there is no long-run equilibrium relationship between model variables, while the results cointegration tests in the presence of structural breaks indicate a long-run (and positive) equilibrium relationship between the variables of the pattern.