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In this paper the impacts of oil price fluctuations on the household welfare for different income groups have been studied using computational general equilibrium model. Equivalent Variation (EV) criterion is also used to evaluate changes in household welfare. The results show that oil price fluctuation has a greater impact on income, expenditure and welfare of urban households compared with the rural ones. In other words, dependence of urban household income on oil price is stronger in comparison to the rural ones. It has also been revealed that an oil price increase is more effective than the price reduction on household welfare, income and expenditure. Ratio of EV to total expenditure is almost the same for the poor and rich households, implying that both of them suffer a percentage of welfare loss in the same way.

Withdrawing energy subsidies has inevitably welfare effects on the Iranian economy. The estimation of this effect can help policy-makers and planners to take the right decisions. In this paper, welfare effects of cash transfer are calculated for electrical energy subsidies using a social accounting matrix and the computable general equilibrium model. In order to evaluate the welfare effect of this policy, GDP index has also been implemented. Three scenarios of prices, cash payment of subsidies and model simulation are considered in this regard. The research findings reveal that as a result of these policies, GDP will dramatically decrease and the economy will fall into a recession. If the cash payments are financed through the following three methods; a) surplus government revenues, b) sales tax on electricity commodity, c) income tax, combined with price increasing policy, will cause a deeper recession and a lower rate of GDP as a result. This trend has a negative and reverse relation with the amount of cash payment subsidies and electrical energy price. Also, the rate of change will heavily depend on the sort of financial resources for such subsidies, as with an increase in cash subsidies and electricity prices, the result would be decreased level of GDP over time.

Exogenous shocks and economic fluctuations led to extensive changes in households’ savings. Changes in household savings can also influence macroeconomic indicators. Thus in this study, the impact of household savings on household Income and GDP are examined using a Computable General Equilibrium (CGE) model. In the literature, there are two static and dynamic general equilibrium models. We apply the Mixed Complementary Problems (MCP) method using the Iran’s time series data. Two different scenarios are considered in this study. In the first scenario, marginal propensity to household savings will be increased twenty percent while in the second scenario marginal propensity to household savings will be decreased by the same rate. Furthermore, we updated and developed a Social Accounting Matrix (SAM) for Iran. The following results are obtained. Using the static model, the results vividly indicate that the urban and rural household incomes have increased 0.31 and 0.5 percent, respectively, through the supply of labor and capital in the first scenario. Moreover, GDP has also increased. The results of the dynamic model in the first scenario show that the rural and urban household income increased by 6.42 percent. However, in the second scenario it declined at the same rate as the first scenario indicating the fact that there is a positive relationship between household income and their savings. GDP has increased on average by 6.41 percent based on the first scenario. In summing up, it is found that by the implementation of the second scenario, the opposite results are obtained.