Currency Depreciation and Income Inequality in Iran, 1984–2024

Iran’s currency has depreciated over a thousand-fold against the US dollar since 1984, while its official Gini coefficient fell from about 0.43 to below 0.40. Using annual data for 1984–2024, I find the exchange rate, broad money and the Gini coefficient are each I(1), but Johansen and Engle-Granger tests detect no robust cointegration. A levels regression yields a high R2 with heavily autocorrelated residuals, indicating spurious regression. Sup-F tests date a permanent downward shift in the Gini at 2011 and in the exchange rate at 2012, but the exchange-rate date is not robust, an alternative series moves it to 1999 and multiple-break analysis finds four exchange-rate breaks (1993, 1999, 2012, 2018) and two Gini breaks (2011, 2017). I therefore treat timing as descriptive. The 2011 shift coincides with the December 2010 subsidy reform, though the design does not identify a reform effect. Granger tests in first differences find no predictive relationship in either direction, unchanged with the alternative series. Gini and exchange rate co-movement is stronger over 2018–2024.