Oil Rents Shocks and Inequality in Iran

34 Pages Posted: 6 Apr 2018

See all articles by Mohammad Reza Farzanegan

Mohammad Reza Farzanegan

University of Marburg - Center for Near and Middle Eastern Studies (CNMS)

Tim Krieger

University of Freiburg - Department of Economics

Date Written: February 12, 2018

Abstract

We study the short and long run responses of income inequality to positive per capita oil and gas rent shocks in Iran. Using historical data from 1973 to 2012 and vector autoregression (VAR)-based impulse response functions, we find a positive and statistically significant response of income inequality to oil rent booms within 4 years of the shock. In addition, the Autoregressive-Distributed Lag (ARDL) results show that in the long run, a 10-percent increase in oil and gas rents per capita leads to an approximately 1.4-percent increase in income inequality. The results are robust to controlling for different channels potentially affecting the income distribution in Iran. Our analysis can help policymakers evaluate and accommodate the possible positive or negative effects on inequality in Iran resulting from the 2016 lifting of the embargo against the country.

Keywords: oil rents, inequality, VAR, ARDL, sanctions, Iran

JEL Classification: Q330, Q380, D630

Suggested Citation

Farzanegan, Mohammad Reza and Krieger, Tim, Oil Rents Shocks and Inequality in Iran (February 12, 2018). Available at SSRN: https://ssrn.com/abstract=3155077 or http://dx.doi.org/10.2139/ssrn.3155077

Mohammad Reza Farzanegan (Contact Author)

University of Marburg - Center for Near and Middle Eastern Studies (CNMS) ( email )

Deutschhausstra├če 12
Marburg, 35037
Germany

HOME PAGE: http://www.uni-marburg.de/cnms/wirtschaft

Tim Krieger

University of Freiburg - Department of Economics ( email )

University of Freiburg
Wilhelmstr. 1b
Freiburg, D-79085
Germany

HOME PAGE: http://www.wguth.uni-freiburg.de

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
41
Abstract Views
483
PlumX Metrics