Effect of Price Changes in Main Commodity Groups on Rural Households Welfare Based on Linear Expenditure System

This paper is to evaluate the effect of price changes in 8 main commodity groups on rural households during 2001-2012. To estimate subsistence level, rural household's data issued by Iranian Statistics Center is used. In addition, by the the results of linear expenditure system, the price and income elasticities is calculated along with the compensation and equivalent variations of Iranian Rural households. The results represent that subsistence level for Rural households is 40637 thousand Rials in the year 2012. Furthermore, the compensation and equivalent variations calculated by of commodity groups indicate the increase of prices in each commodity group of subsistence level will decrease rural households welfare.