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Abstract
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The purpose of this paper is to investigate the degree of transmission of temporary and permanent income shocks on food consumption in Iran over the period 2009-2014, using the household-level data on both food consumption and income as well as the other social characteristics, including age, education level, place of residence employment ,and marriage status. To achieve this aim and to study the deterministic effects of the household on food consumption and income, firstly, an Ordinary Least Squares (OLS) method is used to estimate the impact of some Iranian social characteristics on households’ income and food consumption. Then, the variance–covariance structure of income and food consumption processes is utilized, which has described by the Permanent-Temporary model (PT) to identify the characterizing parameters, which linked the behavior of consumption and income to estimate the consumption-smoothing parameters. The results indicate that there is nearly complete food consumption smoothing against temporary and permanent income throughout the study. Moreover, the social characteristics of households have a significant role in assessing the food consumption and income level of them and hence, the insurance opportunities available to households.
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