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J. Mon. Ec. 2014, 9(2): 64-85 Back to browse issues page
The Inflationary Impact of Energy Subsidy Reform in Iran
Hossein Mirshojaeian Hosseini *1, Vahid Majed1, Shinji Kaneko2
1- Faculty of Economics, University of Tehran
2- Graduate School for International Development and Cooperation, Hiroshima University
Abstract:   (1283 Views)

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 inputoutput 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.

JEL Classification: A11, H70, H71

Keywords: Energy subsidy reform, Input–output price model, Iran, Production and consumption prices
Full-Text [PDF 408 kb]   (733 Downloads)    
Type of Study: Research | Subject: Economics
Received: 2015/04/12 | Accepted: 2016/10/22 | Published: 2016/10/22
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Mirshojaeian Hosseini H, Majed V, Kaneko S. The Inflationary Impact of Energy Subsidy Reform in Iran. J. Mon. Ec.. 2014; 9 (2) :64-85
URL: http://jme.mbri.ac.ir/article-1-125-en.html

Volume 9, Issue 2 (Spring 2014) Back to browse issues page
Journal of Money and Economy Journal of Money And Economy
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