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Illusion therapy: How to impose an economic shock without social pain

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  • Atashbar, Tohid

Abstract

This study attempts to demonstrate how a government launched an economic structural reform plan that previous governments, fearing a serious social backlash, had been unable to implement over the course of 30 years. The findings show that the Iranian government used “illusion therapy”, a package of econo-psychological techniques, to implement IMF-backed “shock” economic reforms to long-standing energy and food subsidies, without facing the expected social reaction.

Suggested Citation

  • Atashbar, Tohid, 2012. "Illusion therapy: How to impose an economic shock without social pain," Journal of Policy Modeling, Elsevier, vol. 34(1), pages 99-111.
  • Handle: RePEc:eee:jpolmo:v:34:y:2012:i:1:p:99-111
    DOI: 10.1016/j.jpolmod.2011.09.005
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    References listed on IDEAS

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    1. Sterner, Thomas, 2007. "Fuel taxes: An important instrument for climate policy," Energy Policy, Elsevier, vol. 35(6), pages 3194-3202, June.
    2. Carter, Colin & Chadee, Doren & Darko, Kwame, 1999. "Are Subsidies to be Blamed? A Reexamination of U.S. Countervailing Duty on Hog Imports From Canada," Journal of Policy Modeling, Elsevier, vol. 21(7), pages 823-830, December.
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    5. Tuck, L. & Lindert, K., 1996. "From Universal Food Subsidies to a Self-Targeted Program: A Case Study in Tunisian Reform," World Bank - Discussion Papers 351, World Bank.
    6. Jean-Luc Migue & Richard Marceau, 1993. "Pollution Taxes, Subsidies, and Rent Seeking," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 355-365, May.
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    8. Ravallion, Martin & van de Walle, Dominique, 1991. "The impact on poverty of food pricing reforms: A welfare analysis for Indonesia," Journal of Policy Modeling, Elsevier, vol. 13(2), pages 281-299.
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    Cited by:

    1. Seyed Habibollah Mosavi, 2016. "Energy price reform and food markets: the case of bread supply chain in Iran," Agricultural Economics, International Association of Agricultural Economists, vol. 47(2), pages 169-179, March.

    More about this item

    Keywords

    Illusion therapy; Shock therapy; Iran economy; Structural reform;

    JEL classification:

    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
    • P41 - Economic Systems - - Other Economic Systems - - - Planning, Coordination, and Reform

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