anchored to a food basket that ensures a minimum calorie intake, in case where food inflation is expected to be significantly different from general inflation between baseline and projected year, the baseline poverty line would not be enough for a household to meet the basic food requirements in the projected year.

In the case of Iraq poverty is defined in terms of consumption so the last step consists in transforming household incomes into predicted consumption levels by using the consumption income ratio for each household from the baseline year.

# **Limitations and assumptions**

There are several limitations and assumptions to apply this method which are important to mention. Firstly, the quality of model projections depends on the nature and accuracy of the data underpinning the exercise. The results would depend not only on the validity of the micro‐models but also on the macro projections. In addition, the use of the last available household data (IHSES 2012) as a comparator is tricky because the comparison could potentially attribute certain outcomes to that particular projection when they are a result of other factors that occurred over the period.

Secondly, the simulation relies on behavioral models built on past data that reflect the pre‐existing structure of the labor market, household incomes and their relationships with demographics as they stood before the expected change. Consequently, the simulation assumes these structural relationships remain constant over the period for which projections are made. The more distant in the past the baseline year is, the more questionable this assumption is likely to be.

The model is limited in its ability to account for shifts in relative prices between different sectors of the economy as a result of the shock. While the poverty impact of shifts in the price of food relative to other prices is taken into account, other potential sources of price impacts are ignored – for example, the general equilibrium effect of a change in the terms of trade between agriculture and other sectors. In the absence of a CGE model, it is nearly impossible to explicitly model for changes in terms of trade between sectors.

The model works in the income space to account for different transmission channels through which households are affected. But to provide poverty projections for Iraq household incomes must be converted into consumption, using the assumption that the household’s ratio between consumption and income is constant over time. This questionable assumption has at least the advantage of being simple and transparent. It is important to note that this assumption is partially relaxed for the case of IDP families as well as those living in governorates affected by the IS.

The model does not allow for geographic mobility of factors (labor or capital) across time. Thus, all individuals are assumed to remain in their 2012 place of origin, even as they experience a change in labor force status or sector of employment. While this assumption is an abstraction from truth, it is likely to matter only when the results are disaggregated spatially or across rural and urban areas. This assumption is relaxed in the case of families who were forced to migrate to a different governorate as a consequence of the war against the Islamic State.

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