[Impact of the food subsidy reduction on Iranian household calorie intake]

In each year, Iranian government provides for food subsidy in its budget. Recently, the effect of food subsidy to the households has been controversial. It is clear that the goal of paying food subsidy is providing the needs of calories for each person and the community food security as a whole. Studies show that about 10-20 percent of Iranian households, intake less calorie than they need. Then it can be a good reason for Iranian government to continue the food subsidy payment. In this Article we use vector autoregressive method for investigating relationship between per capita calorie intake, food subsidy, income and food prices in Iran, using annual data for 1961-2004. Calorie intake is average per capita energy [calorie] intake per day, calculated on the basis of per capita dietary energy derived from national food balance sheets [source FAO:2006]. Real per capita GDP is adjusted with CPI in 1990 and the real food price index is the corresponding nominal index deflated by the CPI in 1990 [Source: Central Bank of the Islamic Republic of Iran year book]. The real food price index [1990 prices] is the corresponding nominal indexed by the CPI [source: Central Bank of the Islamic Republic of Iran year book]. Food subsidy [1990 prices] is deflated by CPI [source: Consumers and Producers Protection Organization]. On the basis of Augmented Dicky Fuller unit root test we find that all variables have only one unit root. In respect to LR, AIC and FPE criteria, the best lag length for initial VAR model is 3 lag. For determining the number of long-run relationships between the variables, we used trace statistics. On the basis of this statistics we only find one long-run relationship [cointegration] between variables. The long run relationship was only significant between calorie intake, income and food subsidy variables. The weakly exogenous test shows that food subsidy does not respond to the discrepancy from long-run equilibrium and income and calorie intake do all of the adjustment. We use the final model for investigating the effect of food subsidy reduction on Iranian households calorie intake. The final model shows that long run income elasticity of calorie demand is 0/16. Also results show that long run food subsidy elasticity of calorie demand is inelastic at 0/009. Since feedback exists between calorie intake, income and food subsidy variables, this ceteris paribus interpretation is potentially misleading because it ignores relations between the three variables in the VAR model. Then, impulse responses may give a better picture of the relations between the variables. Since all the variables are 1 [1], the effects of the shocks are permanent. The results show that one unit 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 one standard error food subsidy reduction occurs with the same amount of income compensation, then the effect of income compensation not only removes the negative effects of subsidy reduction, but also will have positive effect on calorie intake in short-run and long-run. It seems that focus on food subsidy reduction without considering income growth will deteriorate Iranian household calorie intake

[Affluence line estimation for Iranian households]

The paper proposes a simple methodology to estimate an affluence line for Iran. There is a reasonable volume of studies about poor and their characteristics, but little is known about rich. In this regard, one can refer to Marcelo Medeiors who estimated an affluence line for the Brazil in 1999, utilizing the data from the household expenditure and income survey. The idea that poverty is morally unacceptable and can be eradicated through redistribution of wealth provides the grounds for the methodology. Therefore the line is defined as the value that delimitates the aggregated income required to eradicate poverty by the way of transfers from the rich to the poor. Nonetheless, income transfer to the poor are not a permanent solution to the problem of poverty. A real policy has to take many other aspects of the dynamics of an economy into the consideration. Rather, the affluence line methodology aims at defining a statistical tool to allow studies that can contribute to more effective design of redistributionist measures. This kind of line requires the construction of a redistribution rule. To do this, first, one has to presume that, for all individual, the well-being resulted from the addition of an extra amount of any resources decreases as the owned amount of this resource increases. Since it is for poor individual, the transfer an additional income unit is able to provide a higher well-being than it would for rich individual. As a result of this, it is determined that the transfers for the elimination of poverty should occur from the richest individual to the poorest one. The input from Statistical Center of Iran Rural and Urban household expenditure and income survey, provide necessary data for various studies in measuring both poverty and affluence line. This study also takes advantages of raw data from the same project. The period under the study in this paper, covers the years between 1380 and 1383. The poverty line in this study is absolute, based on the 2300 calories, which has been calculated and applied using data on Household expenditure and income survey. To calculate the affluence line, the data on household total expenditure[1] have been used. Since the mentioned statistical data is for the household, so for estimating the affluence line for the household members, provided that all the household members enjoy the same level of welfare, the household total expenditure, divided on its members, will be per head and then the related calculation in following four phase have been accomplished: a] Measuring poverty gap [Gp] b] Measuring wealth differences for each of the population members c] Determining the number of affluent people in the population d] Measuring the affluence line [Zr] Based on the results, in the 1383 on urban areas the affluence line for each individual by month has been about 816 thousand Tomans and the absolute poverty line [2300 calories] about 39 thousand Tomans, and on the rural areas the affluence line for each individual by month has been about 485 thousand Tomans and absolute poverty line [2300 calories] about 19 thousand Tomans, which shows the wide gap between the earning of poor and affluent people. Outcomes based on the calculation of affluence line shows that the number of affluent people [needed for compensation of people below poverty line] in rural areas from 87 thousand in 1380 has been reached to 49 thousand in 1383, while the number of poor people in this period has been reduced. On the contrary, on the urban areas the number of affluent people from 79 thousand has been reached to 173 thousand. The figures illustrate that during the period the poverty alleviation policies have been more effective in rural areas than that of urban. The trend of reducing the poverty rate attesting the very matter, that is to say in rural areas the poverty rate in 1380 has been reduced from 11.5% to 8.6% in 1383, while in urban areas it increases from 10% to 12.4%

Measurement of poverty intensity in Iran applying Sen-Shorrocks Thon[SST] index

SST Index is an appropriate instrument to measure the poverty the poverty intensity. This index can measure the poverty intensity considering number of the poor people and depth of poverty and inequality among them and allows us to decompose poverty into three aspects. Is there an increase in the number of the poor