REDUCING POVERTY THROUGH SUBSIDIES: SIMULATION OF FUEL SUBSIDY DIVERSION TO NON-FOOD CROPS

Indra Maipita (), Wawan Hermawan () and Fitrawaty ()
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Indra Maipita: Universitas Negeri Medan
Wawan Hermawan: Universitas Padjadjaran Bandung
Fitrawaty: Universitas Negeri Medan

Bulletin of Monetary Economics and Banking, 2012, vol. 14, issue 4, 349-366

Abstract: This paper analyzes the impact of fuel subsidy diversion to Non-Food Crops sector on income levels, using AGEFIS; a Computable General Equilibrium model. Then we proceed to apply the Foster-Greer-Thorbecke (FGT) index to measure the indicators of poverty (head count index, poverty gap index and poverty severity index). The simulation result shows the fuel subsidy diversion to Non-Food Crops sector provides a positive impact on increasing household incomes and poverty reduction. Furthermore, the fuel subsidy diversion to Non-Food Crops sector reduces the poverty of rural household, larger than the urban households.

Keywords: Subsidy; poverty; computable general equilibrium; AGEFIS (search for similar items in EconPapers)
JEL-codes: C68 E62 I32 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:14:y:2012:i:4f:p:349-366

DOI: 10.21098/bemp.v14i4.412

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