Welfare and Distributional Impacts of Inflation and the COVID-19 Outbreak in the Islamic Republic of Iran
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World Bank, Washington, DC
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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.
Palabras clave
INFLATION, POVERTY, INEQUALITY, MICROSIMULATION, DISTRIBUTIONAL IMPACT, CORONAVIRUS, COVID-19, PANDEMIC IMPACT