Investment and financing it, is one of the crucial discussions in the economics of development and k at the center of the attention of economists. In the economic literature, it is shown that increasing the government, In other words, public sector investment will crowed out private sector investment.
In this article we have tried to answer one major question. Thut is, whether the public investment in the Iranian economy has caused any significant limitation for private investment or not? The necessary test for answering the above question are done bused on the model of Beljer and Khan. Because of the data limitation. particularly in the stocks capital, its optimum level and the process of public investment, different techniques have been applied. The results obtained in case of testing private sector investment in machinary is relatively satisfactory. Generally, we can claim that in Iran the phenomenon of financial crowding out, is not outstanding. On the other hand the government investment have basically had complementary aspects for the private sector in Iran.
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