The Inflationary Impact of Energy Subsidy Reform in Iran

Hossein Mirshojaeian Hosseini, Vahid Majed () and Shinji Kaneko

Journal of Money and Economy, 2014, vol. 9, issue 2, 64-85

Abstract: Iran has suffered ever-increasing domestic energy consumption, mostly because of its long-standing price control policy. To decelerate this trend, Iran began a reform on its energy subsidy system in December 2010. This paper examines the inflationary impact of the energy subsidy reform on different Iranian non-energy sectors and urban and rural households by making an updated input-output price model and deriving the energy price elasticities (the percentage change in price of non-energy sectors in response to a one percent change in price of energy carriers). The results show that full reform (increasing the domestic energy prices immediately to average regional market prices) would increase consumption prices by 54.1% that impresses the expenditures of urban households more. In addition, the manufacture of non-metallic mineral products, basic metal industries, and transport, storage and communication sectors would experience the largest increase in production prices. Finally, electricity, natural gas and gasoline have the largest impact on production prices.

Keywords: Energy subsidy reform; Input-output price model; Iran; Production and consumption prices (search for similar items in EconPapers)
JEL-codes: A11 H70 H71 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://jme.mbri.ac.ir/article-1-125-en.pdf (application/pdf)
http://jme.mbri.ac.ir/article-1-125-en.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mbr:jmonec:v:9:y:2014:i:2:p:64-85

Access Statistics for this article

More articles in Journal of Money and Economy from Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran Contact information at EDIRC.
Bibliographic data for series maintained by M. E. ().