A general equilibrium analysis of the inflationary impact of energy subsidies reform in Iran

Hossein Mirshojaeian Hosseini and Shinji Kaneko

No 2-8, IDEC DP2 Series from Hiroshima University, Graduate School for International Development and Cooperation (IDEC)

Abstract: Iran has suffered ever-increasing domestic energy consumption mostly due to its price controlling policy. If the trend continues, it will become a pure importer in the following decades. To avoid that unlucky fate, Iran started the energy subsidies reform on December 2010. It increased domestic energy and agricultural prices up to 20 times, making it the first major oil-exporting country to reduce substantially implicit energy subsidies. The paper studies the inflationary impact of the energy subsidies reform on different non-energy sectors and urban and rural households in Iran. For this purpose, the input-output price model of Iran is made and energy cross-price elasticities of non-energy sectors are derived. The results evidence the tremendous effects of the complete reform on the production and consumption prices.

Keywords: Energy subsidies reform; Production and consumption prices; Iran; Input-output price model; Decomposition (search for similar items in EconPapers)
JEL-codes: C67 E31 Q48 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2012-02
New Economics Papers: this item is included in nep-agr, nep-ara and nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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