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Investigating the Effects of Eliminating the Preferred Exchange Rate on Price Index and Cost of Living for Iranian Households in 2022 | ||
| اقتصاد کشاورزی و توسعه | ||
| Article 7, Volume 30, Issue 4 - Serial Number 120, March 2023, Pages 171-196 PDF (1.16 M) | ||
| Document Type: Original Article | ||
| DOI: 10.30490/aead.2023.358935.1444 | ||
| Authors | ||
| zorar Permeh* 1; Alireza Gharshasebi2 | ||
| 1Corresponding Author and Assistant Professor, Institute of Business Studies and Research, Tehran, Iran | ||
| 2Associate Professor, Institute of Business Studies and Research, Tehran, Iran | ||
| Abstract | ||
| Exchange rate fluctuations in the Iranian economy directly affect domestic prices through import channels of intermediate inputs and final consumer goods. Since 2018, following the intensification of US sanctions, one of the special policies of providing consumer goods to the society has been the allocation of preferential exchange to the import of basic goods. However, the number of goods subject to this policy decreased over time, until at the mid of 2022, only a few goods were subject to this policy. The policy of removing the preferential exchange of basic goods in 2022 has some effects on the price index and the cost of living of Iranian households due to the increase in import costs and also the price change of other goods. In the this research, the social accounting matrix of 2016 was used to investigate the effects of the increase in the price of basic goods, including livestock and poultry products (livestock inputs) and edible oil. The results showed that the increase in the price of livestock and poultry products and vegetable oil would increase the price index by 5.4 and 7.8 percentage units, respectively; and the household cost of living index would increase by 9.9 percent (full adjustment of prices) and 9.8 percent (with price adjustment in only 57 activities in the social accounting matrix). Also, the effect of the increase in the price of animal inputs and vegetable oil on the index of the cost of living of households with a lower income level was found to be much higher. On the other hand, the effect of the increase in the price of livestock and poultry products on the cost of living of households was estimated more severe than the removal of the preferential exchange obtained from oil exports. In addition, since the production units in the livestock and poultry sector are few and small, as a result of the removal of the preferential exchange, their working capital would increase more than five times just for the purchase of feed. | ||
| Keywords | ||
| Exchange Rate; Social Accounting Matrix; Price Index and Household Cost of Living | ||
| References | ||
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