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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 1-20, April.
    • Handle: RePEc:idn:journl:v:14:y:2012:i:4:p:1-20
    DOI: https://doi.org/10.21098/bemp.v14i4.364
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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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