Macroeconomic Dynamics of Poverty in Iran

Document Type : Research Paper

Author

Professor in Economics, Department of Economics, University of Mazandaran, Babolsar, Mazandaran Province, Iran, srasekhi@umz.ac.ir

10.22111/ijbds.2025.51556.2219

Abstract

Poverty is one of the most challenging issues in the world, especially in developing countries. Much research has been done on poverty and its causes, but few studies have been conducted to examine the macroeconomic dynamics of poverty. The main purpose of this paper is to examine the macroeconomic dynamics of poverty in Iran, and for this purpose, a system dynamics model has been designed, simulated, and used for Iran. The simulation over the period 1990-2021 shows that, on average, at least the first four income deciles in Iran are below the international poverty line ($6.85 per day). According to the simulation results, international sanctions against Iran, hyperinflation, exchange rate shocks, and expansionary monetary and fiscal policies have increased the poverty rate, but in comparison, the impact of international sanctions has been greater than others. Specifically, the simulation shows that international sanctions have increased the poverty rate in Iran by about 10 percent on average. Even economic growth has not been able to significantly reduce the impoverishing effects of monetary shocks and inappropriate economic policies. According to the results, in addition to lifting international sanctions, targeted policies for sustainable economic growth and development should be implemented, and the Central Bank, while maintaining its independence, should refrain from implementing monetary policies that reduce the value of the national currency.

Keywords

References

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International Journal of Business and Development Studies
Volume 17, Issue 2
October 2025
Pages 231-265

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