An Analysis of Energy Price Reform: A Cge Approach

20 Pages Posted: 15 Feb 2012

See all articles by Davood Manzoor

Davood Manzoor

affiliation not provided to SSRN

Asghar Shahmoradi

University of Calgary - Department of Economics; International Monetary Fund (IMF)

Date Written: March 2012

Abstract

This paper identifies two types of implicit and explicit energy subsidies in Iran as an oil‐producing country. Using a computable general equilibrium model, we study the impacts of reducing implicit and explicit energy subsidies, which entails a huge increase in domestic energy prices. The model is based on a Modified Micro Consistent Matrix (prepared by the authors for the Ministry of Energy in Iran), which includes implicit subsidies and sector‐specific capital. The model consists of 36 commodity goods and 18 production activities. Our findings suggest that, except for energy and services, overall economic activity declines and the consumer faces a lower level of welfare after subsidy reduction. Energy exports would increase and non‐energy exports decline. Domestic energy demand by households and producers would decline as well. On the demand side, the results show a crowding out effect on public goods and services.

Suggested Citation

Manzoor, Davood and Shahmoradi, Asghar, An Analysis of Energy Price Reform: A Cge Approach (March 2012). OPEC Energy Review, Vol. 36, Issue 1, pp. 35-54, 2012. Available at SSRN: https://ssrn.com/abstract=2005513 or http://dx.doi.org/10.1111/j.1753-0237.2011.00200.x

Davood Manzoor (Contact Author)

affiliation not provided to SSRN

No Address Available

Asghar Shahmoradi

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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