The effect of good governance on the business cycles on Iran and OECD countries

This paper investigates the good governance effect on business cycles. As business cycles are related toeconomic growth, the model used in this paper is within the framework of apsis. The period under studyis 1996-2014 for Iran and OECD countries. The model was estimated by Panel data. The resultsindicated that the government effectiveness index is more effective among the six good governanceindicators. Improving the good governance indicators will result in the government increased efficiencyand effectiveness; Consequently, the growth rate would be increased, as well. Also, improvement ofthese indicators can decline fluctuations. According to the relationship of the production positive growthrate (peaks) with economic prosperity and negative growth rate (Perigees) with depression, theimprovement of good governance indicators can have an effective role in the control of the businesscycles.

Keywords:

Good Governance , Business Cycles , Panel Data