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Evaluation the Effect of Food Subsidy Reduction on Iranian Household Calorie Intake: VAR Application

Listed author(s):
  • Kavand, Hossein
  • Heidary, Khalil
Registered author(s):

    In each year, Iranian government provides for food subsidy in its budget. Recently, the effect of food subsidy to the households has been controversial. In this Article we use vector autoregressive method for investigating the effect of food subsidy reduction on Iranian households' calorie intake. The results show that one unit standard error reduction in food subsidy without income compensation has a considerable negative effect on calorie intake in short-run and that it takes around five years for households to adjust themselves to the new condition. But, if the negative shock of food subsidy reduction occurs with the same amount of positive income, then the effect of income increasing not only removes the negative effects of subsidy reduction, but also will have positive effect on calorie intake in short-run and long-run. Therefore, it seems that focusing on food subsidy reduction is not the best solution.

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    Paper provided by Statistical Research and Training Center (Iran) in its series Miscellaneous Publications with number 32659.

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    Date of creation: 2007
    Handle: RePEc:ags:srtcmp:32659
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    1. Behrman, Jere R & Deolalikar, Anil B, 1987. "Will Developing Country Nutrition Improve with Income? A Case Study for Rural South India," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 492-507, June.
    2. Strauss, John, 1984. "Joint determination of food consumption and production in rural Sierra Leone : Estimates of a household-firm model," Journal of Development Economics, Elsevier, vol. 14(1), pages 77-103.
    3. Philip J. Dawson & Richard Tiffin, 1998. "Estimating the Demand for Calories in India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 474-481.
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