Government Spending Fluctuations and Their Effects on Value of Firms

This paper investigates the effect of fluctuations in government spending on the value of firms in preferred industries in the tehran stock exchange (tse). the study employed the tvp-favar (time-varying parameter factor-augmented vector autoregressive) method to analyze seasonal data from 2011 to 2018. the findings indicate that the nature and intensity of the impact of government expenditure on the value of firms vary across different sectors. this suggests that as circumstances change over time, the effects of fluctuations in government expenditure also evolve, and industries respond differently to these behavioral changes. specifically, the value of firms in the automotive industry consistently showed a negative response throughout the entire period studied. in contrast, the food and beverage industry, as well as the pharmaceutical materials and products sector, exhibited a positive reaction to changes in government behavior. furthermore, the impact of government spending on the chemical, plaster, cement, lime, base metals, and products industries fluctuated over time, with both positive and negative effects observed in the short run and long run. the researchers recommend that the government take into account the status and performance of firms when formulating policies. this is because the findings suggest that the impact of government spending on firm value is not uniform across different industries, and that the effects can evolve over time as economic conditions change.