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Potential Economic and Environmental Implications of Diesel Subsidy: A Computable General Equilibrium Analysis for Turkey

Author

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  • Levent Aydin

    (Kirikkale University, Turkey.)

Abstract

This paper is aimed at addressing three interrelated main issues: First is the role of fuel subsidies role in different parties election campaigns in the June 7, 2015 general election in Turkey. Second is the impact of agricultural diesel subsidies on both macroeconomic indices and carbon emissions. Third is the distinction between neutrality and non-neutrality of indirect tax revenues when the diesel is subsidized. Each issue is designed as to the policy scenario to employ multi-sectoral general equilibrium model which investigates the short-run impacts of policy scenarios. The short run simulation results suggest that all shocks are beneficial for the entire economy due to the increase in GDP and welfare with varying degrees. All agricultural sectors gain from the expanding domestic output and exports because of low diesel prices. The scenario followed by non-neutrality of revenue greatly increases in output and consumption, and nevertheless emission level of carbon as well.

Suggested Citation

  • Levent Aydin, 2016. "Potential Economic and Environmental Implications of Diesel Subsidy: A Computable General Equilibrium Analysis for Turkey," International Journal of Energy Economics and Policy, Econjournals, vol. 6(4), pages 771-781.
    • Handle: RePEc:eco:journ2:2016-04-14
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    References listed on IDEAS

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    Cited by:

    1. Jie Yan & Ruiliang Wang, 2024. "Green Fiscal and Tax Policies in China: An Environmental Dynamic Stochastic General Equilibrium Approach," Sustainability, MDPI, vol. 16(9), pages 1-24, April.
    2. Haqiqi, Iman & Yasharel, Sepideh, 2018. "Removing Fossil Fuel Subsidies to Help the Poor," MPRA Paper 95907, University Library of Munich, Germany.
    3. Ozgur, Onder & Aydin, Levent & Karagol, Erdal Tanas & Ozbugday, Fatih Cemil, 2021. "The fuel price pass-through in Turkey: The case study of motor fuel price subsidy system," Energy, Elsevier, vol. 226(C).

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    More about this item

    Keywords

    Computable General Equilibrium; Subsidy; Energy; Carbon Emission;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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