Reading Piketty in Tehran
If you are someone who pays attention to economic news and have not been hiding in a cave for the past few months, you must have heard of the famous book by the French economist Thomas Piketty, Capital in the Twenty-First Century. Since its translation was published in English earlier this year, it has sold more than half a million copies, which is astonishing for a book with many tables and charts (a publisher once told me that each chart cuts sales by 10% — there goes that bit of wisdom).
Last month people were also talking about Piletty’s book in Tehran, and this month’s Mehrnameh, published this week, has a section discussing it, including a short interview by yours truly. I must confess, as I did to the interviewer, that like most people who have bought the book, so far, I have only read the introduction (I have read, however, many of the book reviews — more pages of reviewes than of the book itself! Read an excellent early review by Branko Milanovic here). (more…)
Micro data for analysis of Iran’s economy
The Statistical Center of Iran (SCI) has been gradually moving to make the micro data it collects available to a wider community of researchers. Several years ago, SCI made the Household Expenditure and Incomes Survey (HEIS) available through their publications office in the Fatemi Ave. Anyone could walk in, sign a form so SCI would know who is using the data, and pay a nominal fee to buy a CD with the raw data on it. Hundreds of researchers were able to work with the micro data, numerous Masters and PhD dissertations have been written inside and outside Iran as a result, adding to our understanding of household welfare, poverty, and inequality in Iran. But to obtain the data, someone had to go to that office to pick up the CD. Now, finally, SCI has taken a bold step to make these data available online and for free. So far, there are 29 surveys online, 1984-2012. (See below for how to access the surveys.) (more…)
Will Iran’s inflation rebound?
So far the most visible improvement in the economy since Rouhani administration took office last August has been lower inflation. Last Bahman (Iranian month ending on February 20, 2014) the Consumer Price Index (published by the Central Bank) showed virtually no increase; the same month a year earlier it had jumped by 5.3%. During the last three months (December 21 to February 20), the CPI rose by only 1.6%, compared to 7.2% a year ago. What appears to be more stubborn is the real economy — output and employment that determine living standards. (more…)
Inflation and energy price reform in Iran
The dominant view of the high inflation of the last three years blames it on the subsidy reform. (The latest high profile assertion to this effect came from a piece by Hashem Pesaran and Hadi Salehi Esfahani published by the Fars News Agency, to which Mohammad Ali Farzin, the former head of the subsidy reform program, responded by claming that only 10% of the inflation was due to the subsidy reform). Were it not for the fact that blaming energy prices for the destructive inflation of the last three years casts a long shadow over future policy on energy prices, the mere fact that it is wrong would not prompt me to bore the readers of this blog with yet another post on inflation. (more…)
Transfers in kind: learning the old lessons, again
President Rowhani has received well-deserved high marks in foreign policy for his management of the tough negotiations with P5+1 in Geneva, but his first attempt at dealing with Iran’s broken social protection system does not deserve a passing grade. I explain this in my latest post at Iran Matters. The food distribution plan that, according to an editorial in the conservative Keyhan newspaper, “could have been a gesture that the government cares about the poor … but instead it turned into insult and humiliation.”
The government seems to have made a hasty decision that transfers in kind are superior to cash, despite evidence to the contrary, as I argued in a recent post here. Tadbir, which is the motto of Rouhani’s government and translates into prudence and experience in Persian, should include economics research and the experience of other countries. Are there channels for this type of information to find its way into Iran’s policy circles?
Is Iran’s rate of unemployment really falling?
I have my doubts about the rate of unemployment — 10.3% — recently published by the Statistical Center of Iran (SCI) for fall 2013 (Iranian year 1392), so in a piece that I just published in Lobelog.com I opted to report a rate of 14% that I estimated myself from the SCI report. The difference between the published number and mine is, as in my previous post on unemployment, all in counting the reduction in the number of people in the labor force as discouraged workers and therefore unemployed in common parlance. (more…)
Is it time to declare the war on Iran’s inflation over?
Rouhani’s budget complaint
The president’s television interview on his 101st day in office raised more questions that it answered, especially about the sorry state of the government finances. His criticisms of the previous government’s irresponsible spending commitments is well taken and well known. Less well known and more doubtful is the charge that the previous government is also responsible for lack of revenues. If the blame game is to continue for much longer, it should at least be extended to include two other parties: the public for its unwillingness to pay for the services it consumes and the present administration for not moving fast enough to get them to pay. (more…)
Reading inflation in Iran
There seems to be considerable confusion in the Iranian media about the pace of inflation. Since inflation is the main concern of the new Rouhani economic team, getting the facts right about its pace, whether it is rising or falling, is extremely important. There are questions about the accuracy of the official inflation figures, much of it exaggerated, but the most common source of confusion is not about the accuracy of official data but how to read them. (more…)
In defense of unconditional cash transfers
Iran’s subsidy reform program of 2010 depended heavily on a monthly cash transfer for its social acceptance. About 450,000 rials per person has been paid to all Iranians every month since then without any condition, so people were free to do whatever they wanted with the money. We know little about what they actually did, but there is a sense in Iran that this was not the best way to redistribute the energy subsidies.
There is much talk of improving the targeting of the cash transfer program, but less motivated by a desire to improve its equity than by the desire to cut the program’s cost. The most talked about proposal is to limit payments to the poorer households only, for example, to the bottom 7 deciles. I have already warned in this blog that this is impractical, arguing that identification of people in the top three deciles is very difficult and likely not worth the cost. I believe that the same amount could be raised by some very practical measures, such as charging more for the gasoline sold to consumers in richer neighborhoods and with more expensive cars. (more…)
Tyranny of numbers 
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