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Reducing Poverty Through Subsidies: Simulation Of Fuel Subsidy Diversion To Non-Food Crops

Author

Listed:
  • Indra Maipita

    (Universitas Negeri Medan)

  • Wawan Hermawan

    (Universitas Padjadjaran Bandung)

  • Fitrawaty

    (Universitas Negeri Medan)

Abstract

This paper analyzes the impact of fuel subsidy diversion to Non-Food Crops sector on income levels, using AGEFIS; a Computable General Equilibrium model. Then we proceed to apply the Foster-Greer-Thorbecke (FGT) index to measure the indicators of poverty (head count index, poverty gap index and poverty severity index). The simulation result shows the fuel subsidy diversion to Non-Food Crops sector provides a positive impact on increasing household incomes and poverty reduction. Furthermore, the fuel subsidy diversion to Non-Food Crops sector reduces the poverty of rural household, larger than the urban households.

Suggested Citation

  • Indra Maipita & Wawan Hermawan & Fitrawaty, 2012. "Reducing Poverty Through Subsidies: Simulation Of Fuel Subsidy Diversion To Non-Food Crops," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 14(4), pages 349-366, April.
    • Handle: RePEc:idn:journl:v:14:y:2012:i:4f:p:349-366
    DOI: https://doi.org/10.21098/bemp.v14i4.412
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    References listed on IDEAS

    as
    1. Hills, John, 2004. "Inequality and the State," OUP Catalogue, Oxford University Press, number 9780199276646.
    2. Ruly Marianti & Wawan Munawar, 2006. "Moving Out of Poverty : The Case of Desa Branta Pesisir, Kabupaten Pamekasan," Development Economics Working Papers 22531, East Asian Bureau of Economic Research.
    3. Nguyen Manh Hung & Paul Makdissi, 2004. "Escaping the poverty trap in a developing rural economy," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(1), pages 123-139, February.
    4. Sobrevinas, Alellie B. & de Jesus, Jeremy & Reyes, Celia M. & Bancolita, Joel E., 2009. "Analysis of the Impact of Changes in the Prices of Rice and Fuel on Poverty in the Philippines," Discussion Papers DP 2009-07, Philippine Institute for Development Studies.
    5. repec:idn:journl:v:12:y:2010:i:4:p:1-34 is not listed on IDEAS
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    More about this item

    Keywords

    Subsidy; poverty; computable general equilibrium; AGEFIS;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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