Investigating the Impact of gasoline price on human development index in the Iranian Economy

Abstract

As one of the strategic production inputs, energy has always drawn the attention of policymakers and economists, and humans' ever-increasing need for this input cannot be disregarded. Therefore, access to energy is one of life's essential requirements to reach higher levels of development. Petrol is one of the important energy carriers, and policymaking regarding this fuel has always been a controversial topic in Iran. In fact, petrol becoming a distinctive commodity in the eyes of Iranians has led to petrol pricing having extensive economic, political, and social aspects. In the present study, the Vector Autoregressive Distributed Lag (ARDL) method is applied in order to investigate the impacts of petrol prices on the Human Development Index (HDI). The period under study is 1980-2019. The variables used in the model include the HDI, the Gini coefficient, inflation rate, Total Factor Productivity (TFP) of production, and petrol price. The results indicate that in a long-term perspective, petrol price and the Gini coefficient are the variables with significant negative effects on the HDI, and the inflation rate and TFP of production are the variables with significant positive effects on the corresponding index. As a result, due to the negative impact of gasoline price increase on the human development index, necessary considerations should be taken into account to increase the price of gasoline in Iran's economy, and other policies such as increasing the productivity of production factors should be used to reduce the negative effects of this policy.

Keywords

• : gasoline price
• human development index
• fossil energy
• vector autoregressive distributed lag method