Analyzing the impact of drug price liberalization on poverty and inequality and proposing a new framework for supporting vulnerable groups in Iran's economy on health reform

Document Type : Research Paper

Authors

Department of Economics, Faculty of Law and Economics, Khomeinishahr Branch, Islamic Azad University, Khomeinishahr, Isfahan, Iran

10.22075/ijnaa.2023.32191.4781

Abstract

Improving income distribution is considered as one of the components of economic development in the Iranian economy, especially in the years after the Islamic Revolution. Due to the dependence of the government budget on oil revenues (40%) and the high share of subsidies in the annual budget (10%) of the Iranian economy, fluctuations in the global oil market, sanctions imposed in this area and the subsequent uncertainty in the realization of Oil revenues can affect government budgets and revenue distribution. In this study, to study the effect of drug price liberalization on inequality and income distribution using the Gini coefficient index, the integrated data model in the period 2010: 1 to 2019: 4 has been used. The results show that drug price liberalization has a negative and significant effect on the level of income distribution in the short run.

Keywords

[1] E. Abounoori and M. Shahrazi, Estimation of absolute poverty line based on food poverty line using mathematical programming: A case study of urban areas in Mazandaran province, Iran. J. Econ. Res. 22 (2017), no. 71, 65–80.
[2] N. Arzeroum Chiler, Various dimensions of poverty in Iran, Trend J. (Econ. Res. Trends) (2006), no. 27.
[3] H. Asghapour and A. Mehdiloo, The impact of inflationary environment on exchange rate pass-through on import prices in Iran: Markov-Switching approach, Quart. J. Econ. Res. Policies, 22 (2014), no. 70, 75–102.
[4] F. Bagheri and H. Kavand, Measurement of poverty intensity in Iran: Applying sen-Horrocks-thon (SST) index, Soc. Welfare Quart. 5 (2006), no. 20, 181–192.
[5] B.H. Baltagi, Econometric Analysis of Panel Data, Chichester: Wiley, 2008.
[6] F. Bazzazan, A. Ghasemi, H. Raghfar, and S. Hasanvand, Investigating the effectiveness of government policies in reducing poverty in Iran, Econ. Dev. Policy 3 (2015), no. 3.
[7] M. Bruno, M. Ravallion, and L. Squire, Equity and Growth in Developing Countries: Old and New Perspectives on the Policy Issues, World Bank Publications, 1996.
[8] V.A. Dang, M. Kim, and Y. Shin, Asymmetric capital structure adjustments: New evidence from dynamic panel threshold models, J. Empir. Finance, 19 (2012), no. 4, 465–482.
[9] G. Datt and M. Ravallion, Growth and redistribution components of changes in poverty measures: A decomposition with applications to Brazil and India in the 1980s, J. Dev. Econ. 38 (1992), no. 2, 275–295.
[10] C. de Miguel, B. Manzano, and J.M. Martın-Moreno, Oil price shocks and aggregate fluctuations, Energy J. 24 (2003), 47–62.
[11] F. Decarolis, M. Polyakova, and S.P. Ryan, The Welfare Effects of Supply-Side Regulations in Medicare Part D, National Bureau of Economic Research, 2015.
[12] N. Dehmordeh, M. Safdari and M. Shahiki Tash, The effect of macroeconomic indices on income distribution in Iran, Iran. J. Trade Stud. 14 (2010), no. 54, 25–55.
[13] J. Foster, Notes and comments: A class of decomposable poverty measures, Econometrica 52 (1984), no. 3.
[14] M.W. Frank, Inequality and growth in the United States: Evidence from a new state-level panel of income inequality measures, Econ. Inq. 47 (2009), no. 1, 55–68.
[15] O. Galor and D. Tsiddon, The distribution of human capital and economic growth, J. Econ. Growth 2 (1997), no. 1, 93–124. 
[16] J.D. Hamilton, Oil and the macroeconomy since World War II, J. Politic. Econ. 91 (1983), no. 2, 228–248.
[17] B.E. Hansen, Sample splitting and threshold estimation, Econometrica 68 (2000), no. 3, 575–603.
[18] M.H. Hasani Sadrabadi and A. Jalalabadi, The effect of labor market policies and determinants of economic growth on income inequality, Econ. Res. J. (2008), no. 3.
[19] R. Hausmann and M. Gavin, Securing stability and growth in a shock prone region: the policy challenges for Latin America, R. Hausmann and H. Reisen (eds.), Securing stability and growth in Latin America, OECD, Paris, 1996.
[20] N. Kaldor, A model of economic growth, Econ. J. 67 (1957), no. 268, 591–624.
[21] M.H. Khan, Governance, growth and poverty reduction, Poor Poverty 61 (2009).
[22] A.A. Khosravinezhad, Estimation of poverty indices in Iranian urban and rural households, J. Econ. Model. 6 (2012), no. 2, 39–60.
[23] A. Koochakzadeh and S.A. Jalaei Esfandabadi, Effect of exchange rate uncertainty on non-oil exports in Iran, J. Agric. Econ. Res. 19 (2013), 121–135.
[24] S. Kuznets, Economic growth and income inequality, The gap between rich and poor, Routledge, 2019, 25–37.
[25] M. Lundberg and L. Squire, The simultaneous evolution of growth and inequality, Econ. J. 113 (2003), no. 487, 326–344.
[26] H.-G. Min, S.-O. Shin, and J.A. McDonald, Income inequality and the real exchange rate: linkages and evidence, Annal. Econ. Finance, 16 (2015), no. 1.
[27] A.K. Mohammadlou and H. Khodaveisi, Investigating the relationship between exchange rate, inflation rate and interest rate under the approach of Fisher’s theories in Iran’s economy, Appl. Econ. Stud. Iran 6 (2016), 199–221.
[28] M. Molaei and A. Golkhandan, The effect of the government’s external debt on Iran’s economic growth, Econ. Res. J. 14 (2014), no. 53.
[29] K.A. Mork, Oil and the macroeconomy when prices go up and down: an extension of Hamilton’s results, J. Politic. Econ. 97 (1989), no. 3, 740–744.
[30] D.K. Mundaand W. Odhiamb, Urban poverty and labour force participation in Kenya Institute for Public Policy Research Symposium, Washington DC, 2003.
[31] T.H.H. Pham, Income inequality and foreign aid, Laboratoire d’Economie et de Management Nantes-Atlantique (LEMMA) Working Paper, 2015.
[32] R.S. Pindyck, The present value model of rational commodity pricing, Econ. J. 103 (1993), no. 418, 511–530.
[33] J.J. Rotemberg and M. Woodford, Imperfect competition and the effects of energy price increases on economic activity, National Bureau of Economic Research, Working Paper 5634, (1996).
[34] W. Rougoor and C. Van Marrewijk, Demography, growth, and global income inequality, World Dev. 74 (2015), 220–232.
[35] M.N. Sherafat Jahromi and Z. Negin Taji, The impact of macroeconomic policies on income distribution in Iran, J. Econ. Model. 1 (2010), no. 2.
[36] Z. Xiaobin, Z. Li, and S.T.O. Kelvin, Income inequalities under economic restructuring in Hong Kong, Asian Survey 44 (2004), no. 3, 442–473.

Articles in Press, Corrected Proof
Available Online from 23 October 2024
  • Receive Date: 29 September 2023
  • Accept Date: 08 December 2023