Analyzing Increased Government Expenditure on Poverty in Iran

In this study a static Computable General Equilibrium model based on Iranian Social Accounting Matrix of 1380 was applied to investigate the impact of 20 and 50 percent increase in Government expenditures under floating exchange rate regimes on poverty indices. The impact of increased Government expenditure on poverty indices was performed by analyzing its impact on household’s consumption and prices. The results revealed that based on the consumption changes, increased Government expenditures increases poverty throughout urban households, while regarding the price changes, increments of Government expenditure will reduce poverty indices. In the case of rural households, based on both of consumption and price changes approaches, increases in Government expenditures would result in reduced poverty indices. However regarding the level of incremental expenditures, changes in poverty indices are not considerable.