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Production Subsidies Elimination on Iranian Economy (Applying CGE Model)

Author

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  • Mashallah Salarpour

    (Department of Agricultural Economics, Zabol University, Iran)

  • Fatemeh Alijani

    (Department of Agricultural Economics, Payame Noor University, Iran)

Abstract

In present study, the impacts of production subsidies elimination on production, export, import, employment, and different macroeconomic variables have been evaluated based on a Computable General Equilibrium model (CGE) for Iran's economy. The model applied the Iranian input-output table data of year 2002. Three scenarios include 25, 50, and 100 percent reduction in production subsidizing rate were analyzed, respectively. Results did not show any significant change in production and employment rate in oil and mineral production sectors, but implied a reduction in production, employment rate and exports of industry, agriculture and service in all scenarios. It found the food industry was the most vulnerable part of Iran's economy, so paying more attention to growth rate of agriculture and food industry may inevitably facilitate the elimination policy of production subsidies. With regard to negative consequences of production subsidies elimination overall agricultural sector, the agricultural products need more support on productivity growth in factors of production.

Suggested Citation

  • Mashallah Salarpour & Fatemeh Alijani, 2014. "Production Subsidies Elimination on Iranian Economy (Applying CGE Model)," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 18(1), pages 65-80, Winter.
    • Handle: RePEc:eut:journl:v:18:y:2014:i:1:p:65
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    References listed on IDEAS

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    1. Dixon Peter B & Lee Bumsoo & Muehlenbeck Todd & Rimmer Maureen T. & Rose Adam & Verikios George, 2010. "Effects on the U.S. of an H1N1 Epidemic: Analysis with a Quarterly CGE Model," Journal of Homeland Security and Emergency Management, De Gruyter, vol. 7(1), pages 1-19, December.
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    1. Solomon Tsehay Feleke & Alemnesh Gebreselassie & Zerayehu Eshete & Asmayit Tekeste & Lulit Mitik Beyene, 2019. "Resource Allocation across Industrial Sectors, Growth, Poverty, and Income Inequality in Ethiopia: A Macro-Micro Approach," Working Papers MPIA 2019-16, PEP-MPIA.

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