In present study a system dynamics model is applied to investigate the interrelationship between the factors of economic growth and income distribution in Iranian economy. The direct and indirect effects of these factors are analyzed in order to investigate the final effect of a proper economic policy on economic growth and income distribution. The results show a two way relationship between economic growth and income distribution. Furthermore, the effect of government development expenditure, compared to the government consumption expenditure, is found to be more in improving economic growth and income distribution measured by the Gini coefficient.
