Economic and social development in developing countries are dependent on the government’s ability to m ake enough revenue for providing necessary programs- service programs like health, training, transportation and communication. Therefore, the relationship between government revenue and expenditure in every country is a scale formeasuring the level of development and growth. Data of 1970-2002 was used. At first we use unrestricted error correction model (UECM) that has been suggested by Pesaran et al for testing cointegration between government revenue and expenditure, then we use inter-temporal budget constrain (IBC) f or fiscal sustainability. The results show that government revenue is changed to government expenditure quickly, but it takes long for government expenditure to change to government revenue, although there is no fiscal sustainabilityin Iran.

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