TY - JOUR ID - 84924 TI - Inflation Inequality and Household Response Effect: Evidence from Iran JO - Journal of Economic Research (Tahghighat- E- Eghtesadi) JA - JTE LA - en SN - 0039-8969 AU - Azarbayejani, Alireza AU - Rahmani, Teymur AU - Madani zadeh, Seyed Ali AU - afrouzi, hassan AD - Ph.D. Student, Faculty of Economics, University of Tehran AD - Associate Professor, Faculty of Economics, University of Tehran AD - Assistant Professor, Faculty of Economics, Sharif University of Technology AD - Assistant Professor, University Y1 - 2021 PY - 2021 VL - 56 IS - 1 SP - 1 EP - 24 KW - Inflation KW - Inflation Inequality KW - Regional Inflation Inequalit DO - 10.22059/jte.2021.84924 N2 - In this paper, I study the inflation inequality across different income deciles of the Iranian economy for the years 1374-1398. The results show that the different pattern of household purchases in different income deciles and the difference in their response to inflation is an important factor in creating inflation inequality. The heterogeneity in household purchases causes the rate of inflation inequality between the rich and the poor to increase by 12 percent per unit of average inflation.High-income households by changing their consumption baskets are able to reduce the adverse effects of inflation by 5%. On the other hand, low-income families face higher inflation rates by up to 4% because of an increase in their consumption of essential goods. As a result, for every unit of average inflation increase, the rate of inflation inequality felt by households increases by up to 20% compared to the previous case. In other words, the response of households to inflation causes a 66% increase in inflation inequality per unit of average inflation.Also, the evidence suggests that the difference in the inflation across provinces causes, firstly, the rate of inflation inequality per unit increase in average inflation to increase significantly compared to the case where provincial heterogeneity was not considered; Second, inflation inequality is observed within each decile.JEL Classification: E31, E52, D31, D33, D12, D63Keyword: Inflation, Inflation Inequality, Regional Inflation Inequality UR - https://jte.ut.ac.ir/article_84924.html L1 - https://jte.ut.ac.ir/article_84924_9732afe233568cc4da67f83ec563b2b6.pdf ER -