Investigating the Possible Effects of the Global Financial Crisis on the of Iranian Urban and Rural Households Income : A CGE approach



World financial Crisis Occurred in 2008 affected many countries and caused to slow significantly global growth. Financial crisis is already causing a considerable Slowdown in some developing countries. This paper focuses on the implications of the ongoing global financial crisis and economic downturn for Iran's household income. We emphasize on two channels by which financial crisis spread to developing countries: trade and foreign investment. Using CGE model for analyzing the effects of financial crisis on Iran's household income show shat decline in export and import commodity price affect urban household income more than rural household income. While export decline in price and foreign saving reduce household income, import price downturn, compensate income reduction and as a result, urban and rural areas Income decreas slightly. Using CGE model show that 10 percentage reduction in import and export prices and foreign saving decreas urban and rural households income respectively 1.96 and .8 percentage and enterprices income decrease by 0.01 percentage. Deepening financial crisis will have significant effects, so that 50 percentage decrease in import and export price and foreign saving decreases urban, rural and enterprices income by 11.5, 7.6 and 1.47 percentage respectively.
JEL classification: D58; D30; G01