Author
Abstract
Price changes Price change is the most important channel to reflect the effects of economic policies on economic situation of households. Price change effects which captured by means of price elasticity of poverty index could be decomposed two components. The first is income effect and the second is distributional effect,which measures the relative price change. Distribution effect determines whether the price changes benefit the poor proportionally or benefit the non-poor. Also this paper uses price index for poor (PIP),which can be computed for any poverty indexes. PIP uses the share of goods expenditure in total household budget of poor household,so PIP shows the poor reflection more precisely. While the conventional consumer price index such as Laspiears use the share of goods expenditure in total household budget as an average,which reflect household behavior with average income. The empirical results by using urban Iranian households data,based on the consumer demand theory,show the price changes during (2003-2008) period,occurred in away that favor of the non-poor proportionally more than the poor. Just during (2004-2005),price changes proportionally have favored the poor,because the non-basic good's price had faster increase than basic good's price.
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