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Multi-Exchange Rate Systems and Consumption Inequality: Evidence from Iran’s Preferential Currency Removal

Yasini, Shahrad | 2025

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 58206 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Ansari, Mahdi
  7. Abstract:
  8. Multiple exchange rate systems have been implemented in a significant number of emerging markets as a tool to reduce the prices of essential goods and consumption inequality. Iran, with a long-standing history of such interventions, eliminated its preferential exchange rate for most goods in the spring of 2022 and simultaneously increased direct cash transfers to households. This policy package offers a rare opportunity to assess the impact of multiple exchange rate systems on inequality. Using daily sales data from a major retail chain in Tehran, monthly Consumer Price Index data by product categories, and income information from a 2% sample of the National Welfare Database, we apply a triple-difference approach to compare pre- and post-policy periods across regions in Tehran with different income levels. The results indicate that overall consumption inequality did not change significantly, but for certain product groups, it increased over the medium term. This study is the first to examine the effects of eliminating the preferential exchange rate on consumption inequality. The results offer valuable insights for policymakers evaluating the effectiveness of such re-distributional policies
  9. Keywords:
  10. Consumption Inequality ; Triple Difference-in-Differences ; Multi-Exchange Rate Systems ; Preferential Currency ; Impact Evaluation

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