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Welfare and Distributional Impacts of Inflation and the COVID-19 Outbreak in the Islamic Republic of Iran

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  • Rodriguez Takeuchi,Laura Kiku
  • Atamanov,Aziz

Abstract

This paper simulates the welfare and poverty impacts of the COVID-19 pandemic in the Islamic Republic of Iran, emphasizing the role of inflation, which lowered the purchasing power of households and had heterogeneous impacts across the distribution and in different regions of the country. First, income losses are estimated with a microsimulation analysis based on shock scenarios. Second, combining data on price changes with expenditure baskets for various groups of households, group-specific price indices are calculated. These are then applied to the post-shock income changes to assess the deterioration of living standards associated with inflation. Poverty substantially increases, by up to 21 percentage points, as a combined result of the fall in household incomes and high inflation through the pandemic. Iranians in the bottom half of the welfare distribution, those working in services and high-contact economic sectors, and those in rural areas are disproportionately affected.

Suggested Citation

  • Rodriguez Takeuchi,Laura Kiku & Atamanov,Aziz, 2021. "Welfare and Distributional Impacts of Inflation and the COVID-19 Outbreak in the Islamic Republic of Iran," Policy Research Working Paper Series 9558, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9558
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    Cited by:

    1. Can, Zeynep Gizem & O'Donoghue, Cathal & Sologon, Denisa Maria & Smith, Darius & Griffin, Rosaleen & Murray, Una, 2023. "Modelling the Distributional Effects of the Cost-of-Living Crisis in Turkey and the South Caucasus: A Microsimulation Analysis," IZA Discussion Papers 16619, Institute of Labor Economics (IZA).
    2. Abdullah Kaviani Rad & Redmond R. Shamshiri & Hassan Azarm & Siva K. Balasundram & Muhammad Sultan, 2021. "Effects of the COVID-19 Pandemic on Food Security and Agriculture in Iran: A Survey," Sustainability, MDPI, vol. 13(18), pages 1-20, September.
    3. World Bank, 2021. "Iran Economic Monitor, Spring 2021," World Bank Publications - Reports 35741, The World Bank Group.

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    Keywords

    Inequality; Inflation; Employment and Unemployment; Health Care Services Industry;
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