The Effects of the Targeted Subsidies on Urban Costs

The unsustainable distribution system of subsidies was one of the main issues of Iran's economy during the last decades. Then, in late ۲۰۱۰, the targeted subsidy policy was planned to achieve fairness. The effects of implementing this policy on the consumption expenditure of Iranian urban households have not yet been addressed so far. Considering the importance of the consumption of the private sector as the most important component of Gross Domestic Product (GDP), we studied the effect of targeted subsidies on the consumption private sector in different provinces of Iran during the years of ۲۰۰۸-۲۰۱۷ using a panel data model. The results of the study showed that, in the three groups of provinces, the targeted subsidies policy had no effect on the cost of food and tobacco of Iranian urban households, but non-food costs were affected directly in the group of the highly and very highly developed provinces and inversely in groups of the nearly developed and the less developed provinces.