Journal of Economic Research (Tahghighat- E- Eghtesadi)

Journal of Economic Research (Tahghighat- E- Eghtesadi)

Reform of Energy Subsidies, Technological Change and the Energy Consumption Phase in the Iranian Economy

Document Type : Research Paper

Authors
Gholam Ali Sharzehi 1
Mansour Khalili Araghi 2
Sajjad Barkhordari 3
1 Associate Professor, Faculty of Economics, University of Tehran
2 Professor, Faculty of Economics, University of Tehran, Email: khalili@ut.ac.ir
3 Assistant Professor, Faculty of Economics, University of Tehran,
10.22059/jte.2014.53188
Abstract
Abstract
The reform of energy subsidies has affected economic growth, as a result of household and firms’ behavior. However, despite the energy consumption and economic growth decrease in the short run, it is expected that economic growth will increase as a result of an adjustment in economic agents’ behavior over the mid- and long-terms. As is appropriate with these changes, energy consumption will change differently. In this paper, we modeled the adjustment in economic agents’ behavior through a dynamic CGE approach. In this model, we identified phases of energy consumption at both the final and intermediate consumption stages in different scenarios. The results showed that, in all the chosen scenarios the consumption of oil and energy products have a strong response to the reform of energy prices in comparison with other types of energy. In addition, the growth of energy consumption in all the scenarios would increase slowly in comparison to economic growth. Also, the Iranian economy would return to its normal phase over the middle-to long-run. Therefore, preparing the conditions for a speedy adjustment in agents’ behavior can decrease the negative effects of energy price reform on economic growth.
Keywords
Keywords: Economic adjustment
Energy consumption
economic growth
Dynamics
General Equilibrium
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Journal of Economic Research (Tahghighat- E- Eghtesadi)
Volume 49, Issue 4 - Serial Number 4
Winter 2015
Pages 799-833

  • Receive Date 19 May 2013
  • Revise Date 18 March 2015
  • Accept Date 30 September 2014