The Welfare Effects of Price Changes in the Main Commodity Groups in Iran

This paper evaluates the welfare effects of price changes in the main commodity groups in Iran. Using the Iranian urban households’ data issued by the Iranian Statistics Center over the period 1994-2007 we estimate the subsistence level. In addition، using the results from the linear expenditure system we calculate the price and income elasticities along with the compensation and equivalent variations for the Iranian urban households. Results show that the subsistence level for the Iranian household in year 2007 was 39141117 Rials. Furthermore، calculated compensation and equivalent variations show that the price changes had caused the maximum welfare decline in the Food and Housing groups.