Volume 12, Issue 44 (8-2012)                   refahj 2012, 12(44): 143-173 | Back to browse issues page

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Abbasian E, Asadbagi Z. The Effects of Energy Carelers' Subsidy Targeting on Social Welfare through Economic Growth. refahj. 2012; 12 (44) :143-173
URL: http://refahj.uswr.ac.ir/article-1-917-en.html
Abstract:   (7448 Views)

  According to the fourth socio-economic development plan approach on the price of petroleum products and also for the fulfillment of the goals of 20 years economic vision document in Iran, increasing the price of energy products and removing their subsidy seems to be inevitable for Iran’s economy. Subsidies as an economic and fiscal policy instrument play an important role in economic growth. Since economic growth is a desirable goal, so identification of its underlying factors and their contribution is focused by economists and politicians. Therefore, investigating the effects of subsidies on economic growth, especially in economic sectors' growth is important.

  This research has attempted to study the effects of subsidies on energy carriers (petroleum products, electricity and natural gas) on the growth of different Iranians economic sectors. For this purpose , Input-Output table1 and its related techniques (price model) is used to study the impacts of removing subsidy on these energy carriers ( based on free price of petroleum products, electricity and natural gas) on the growth of various Iranian economic sectors (services, industry and agriculture) in the form of four scenarios.

  Results indicate that removing subsidies on petroleum products, electricity and natural gas have a negative effect on the production of industry, public accommodation services and transportation. In other words, subsidizing energy carriers have a positive impact on the value added growth of these sections. But removing subsidies on energy carriers and price liberalization in all four scenarios, agriculture sector's value added, due to its lower dependency on energy carriers and also low relative prices of this section would increase. This shows that subsidizing energy carriers would not have a positive impact on agricultural sector economic growth. Moreover, the results show that after price liberalization of petroleum products, electricity and natural gas, wholesales and retail services, restaurant and other services sector value added would increase. This shows that subsidizing energy carriers may not have a positive effect on these sections.

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Received: 2013/01/16 | Published: 2012/08/15

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