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Information Journal Paper

Title

The Effect of Relative Price Changes on Income Distribution

Pages

  1-19

Abstract

 Supportive policies that lead to significant relative price changes have widespread impact on income distribution that cannot be considered by adjusting expenditures with the consumer price index. While households have different consumption patterns in different income deciles, the Consumer Price Index (CPI) measures changes in prices based on the pattern of consumption in the average-income households. To overcome the issue, this paper examines the impact of relative price changes on distribution of real income (real expenditure) based on the HSPI Index, which is calculated using the weights of goods in each household’ s basket. The period under study is 2007-2015. To measure Inequality, the Gini coefficient is used based on Ogwang method. The results show that in periods that price of foods increase more than other categories, income Inequality is the more when calculated, respectively, based on Household Specific Price Index (HSPI) and Consumer Price Index (CPI) than Gini coefficient based on nominal expenditures. Because of higher share of foods in consumption basket of low-income households, higher relative price of this category leads to worsening of income distribution and loss of welfare for low-income class.

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  • Cite

    APA: Copy

    PARVIN, SOHEILA, ABDOLLAH MILANI, MAHNOUSH, & REZAEI, VAHID. (2019). The Effect of Relative Price Changes on Income Distribution. ECONOMIC RESEARCH REVIEW, 18(71 ), 1-19. SID. https://sid.ir/paper/374859/en

    Vancouver: Copy

    PARVIN SOHEILA, ABDOLLAH MILANI MAHNOUSH, REZAEI VAHID. The Effect of Relative Price Changes on Income Distribution. ECONOMIC RESEARCH REVIEW[Internet]. 2019;18(71 ):1-19. Available from: https://sid.ir/paper/374859/en

    IEEE: Copy

    SOHEILA PARVIN, MAHNOUSH ABDOLLAH MILANI, and VAHID REZAEI, “The Effect of Relative Price Changes on Income Distribution,” ECONOMIC RESEARCH REVIEW, vol. 18, no. 71 , pp. 1–19, 2019, [Online]. Available: https://sid.ir/paper/374859/en

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