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J. Mon. Ec. 2014, 9(3): 1-31 Back to browse issues page
Should all Iranian Citizens Receive the Same Subsidy Rebate?
Hassan Molana1, Abolfazl Rahimi *2
1- University of Dundee
2- Faculty of Economics, Shahid Beheshti University
Abstract:   (1312 Views)

The ‘Subsidy Targeting Project’ was introduced by the government of Iran in 2010 to ease the impact of removing price subsidies (carried out as part of recent economic liberalization reforms). Under this scheme, regardless of their socio-economic characteristics, Iranian citizens residing in Iran receive the same amount of cash rebate (currently 455,000 Iranian Rials per month). This paper uses the equivalence scales approach to query the fairness of this policy exercise. We use Iran’s Household Expenditure and Income Surveys datasets for 1984-2007 (compiled annually by the Statistical Centre of Iran) to estimate the Engel-curve-based equivalence scales which take account of the main household features: size, geographic location, and a number of characteristics of head of household. Our estimates suggest a clear profile of redistribution which questions the fairness of disregarding households’ characteristics in such a large scale redistribution exercise which was primarily designed to offset the welfare impacts of removing price subsidies.

JEL Classification: I30, I31, I32, I38

Keywords: Cluster regression, Demographic features, Engel curve, Household equivalence scale, Iran
Full-Text [PDF 622 kb]   (725 Downloads)    
Type of Study: Research | Subject: Microeconomics
Received: 2015/04/26 | Accepted: 2016/10/22 | Published: 2016/10/22
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Molana H, rahimi A. Should all Iranian Citizens Receive the Same Subsidy Rebate? . J. Mon. Ec.. 2014; 9 (3) :1-31
URL: http://jme.mbri.ac.ir/article-1-130-en.html

Volume 9, Issue 3 (Summer 2014) Back to browse issues page
Journal of Money and Economy Journal of Money And Economy
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