IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/95826.html
   My bibliography  Save this paper

Impacts of Energy Price Increase and Cash Subsidy Payments on Energy Demand

Author

Listed:
  • Manzoor, Davood
  • Haqiqi, Iman

Abstract

Energy demand is mainly a function of own price, price of substitute energies, the activity level of sectors, cost of materials and labor and capital, cost-share of energy, elasticity of substitution parameters and households income. The main purpose of this paper is to measure the changes in energy demand after energy price increase and cash subsidy payment to households. We apply a Computable General Equilibrium (CGE) model of Iran as a small open economy. The model is specialized in modeling energy market in Iran. We consider 7 energy goods; the discriminatory energy prices are considered between sectors, and energy markets are modeled to show how government controls the prices. The model is calibrated based on Energy Micro Consistent Matrix (EMCM) of Ministry of Energy. We found that chemical Industry and Transportation Services face the highest reduction in sectoral energy demand. In the counterfactual scenario, the relative price of electricity compared to other energies declines. Therefore electricity demand would increase in the long run when compared to short-run demand level. But as expected, the gas-oil and fuel demand would decrease in the long run.

Suggested Citation

  • Manzoor, Davood & Haqiqi, Iman, 2013. "Impacts of Energy Price Increase and Cash Subsidy Payments on Energy Demand," MPRA Paper 95826, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:95826
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/95826/1/MPRA_paper_95826.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. AydIn, Levent & Acar, Mustafa, 2011. "Economic impact of oil price shocks on the Turkish economy in the coming decades: A dynamic CGE analysis," Energy Policy, Elsevier, vol. 39(3), pages 1722-1731, March.
    2. Sancho, Ferran, 2010. "Double dividend effectiveness of energy tax policies and the elasticity of substitution: A CGE appraisal," Energy Policy, Elsevier, vol. 38(6), pages 2927-2933, June.
    3. Jensen, Jesper & Tarr, David, 2002. "Trade, foreign exchange, and energy policies in the Islamic Republic of Iran : reform agenda, economic implications, and impact on the poor," Policy Research Working Paper Series 2768, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Haqiqi, Iman & Manzoor, Davood, 2012. "Environmental Impacts of Phasing out Energy Subsidies," MPRA Paper 95688, University Library of Munich, Germany, revised 2016.
    2. Haqiqi, Iman & Yasharel, Sepideh, 2018. "Removing Fossil Fuel Subsidies to Help the Poor," MPRA Paper 95907, University Library of Munich, Germany.
    3. Haqiqi, Iman & Bahalou, Marziyeh & Hamidi, Razieh, 2014. "Measurement and Evaluation of Equality of Opportunity: A Numerical Look at Education, Health, and Income Inequality," MPRA Paper 95866, University Library of Munich, Germany.
    4. Aghababaei, Mohammad Ebrahim, 2019. "General Equilibrium Resource Elasticity in an Open Resource-Abundant Economy," MPRA Paper 97851, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bjertnæs, Geir H. & Tsygankova, Marina & Martinsen, Thomas, 2013. "Norwegian climate policy reforms in the presence of an international quota market," Energy Economics, Elsevier, vol. 39(C), pages 147-158.
    2. Pinglin He & Jing Ning & Zhongfu Yu & Hao Xiong & Huayu Shen & Hui Jin, 2019. "Can Environmental Tax Policy Really Help to Reduce Pollutant Emissions? An Empirical Study of a Panel ARDL Model Based on OECD Countries and China," Sustainability, MDPI, vol. 11(16), pages 1-32, August.
    3. Millard, Robert & Withey, Patrick & Lantz, Van & Ochuodho, Thomas O., 2017. "The general equilibrium costs and impacts of oil price shocks in Newfoundland and Labrador," Energy Economics, Elsevier, vol. 68(C), pages 192-198.
    4. Jesser PALADINES, 2017. "Oil Price and Real GDP Growth of Ecuador: A Vector Autoregressive Approach," Journal of Economics and Political Economy, KSP Journals, vol. 4(1), pages 71-78, March.
    5. Zhang, Chuanguo & Tu, Xiaohua, 2016. "The effect of global oil price shocks on China's metal markets," Energy Policy, Elsevier, vol. 90(C), pages 131-139.
    6. Rouhollah Shahnazi & Maryam Lashani Afrasiabi, 2018. "Effect of Exogenous Oil Revenue Shocks on Reallocation of Public and Private Investments in Iran," International Journal of Energy Economics and Policy, Econjournals, vol. 8(1), pages 27-37.
    7. Zhan-Ming Chen, 2017. "Inventory and Distribution of Energy Subsidies of China," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).
    8. Solaymani, Saeed & Kari, Fatimah, 2014. "Impacts of energy subsidy reform on the Malaysian economy and transportation sector," Energy Policy, Elsevier, vol. 70(C), pages 115-125.
    9. Leman ERDAL, 2015. "Determinants of Energy Supply Security: An Econometric Analysis For Turkey," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 15(2), pages 153-163.
    10. Geir H. Bjertnæs & Marina Tsygankova & Thomas Martinsen, 2012. "The double dividend in the presence of abatement technologies and local external effects," Discussion Papers 691, Statistics Norway, Research Department.
    11. Sun, Yuanyuan & Mao, Xianqiang & Liu, Gengyuan & Yin, Xinan & Zhao, Yanwei, 2020. "Modelling the effects of energy taxes on ecological footprint transfers in China's foreign trade," Ecological Modelling, Elsevier, vol. 431(C).
    12. Xavier Labandeira & José M. Labeaga & Xiral López-Otero, 2019. "New Green Tax Reforms: Ex-Ante Assessments for Spain," Sustainability, MDPI, vol. 11(20), pages 1-25, October.
    13. Ana-Isabel Guerra & Laura Varela-Candamio & Jesús López-Rodríguez, 2016. "Evaluating Macroeconomic And Distributional Impacts Of Current And Alternative Tax Reforms In Spain: An Applied General Equilibrium Approach," EcoMod2016 9322, EcoMod.
    14. Jiang, Zhujun & Ouyang, Xiaoling & Huang, Guangxiao, 2015. "The distributional impacts of removing energy subsidies in China," China Economic Review, Elsevier, vol. 33(C), pages 111-122.
    15. Timilsina, Govinda R., 2015. "Oil prices and the global economy: A general equilibrium analysis," Energy Economics, Elsevier, vol. 49(C), pages 669-675.
    16. James Boyce & Matthew Riddle & Mark D. Brenner, 2005. "A Chinese Sky Trust? Distributional Impacts of Carbon charges and Revenue Recycling in China," Working Papers wp_brenner_riddle_boyce, Political Economy Research Institute, University of Massachusetts at Amherst.
    17. Azad, Rohit & Chakraborty, Shouvik, 2020. "Green Growth and the Right to Energy in India," Energy Policy, Elsevier, vol. 141(C).
    18. Ibrahim, Mansor H. & Ahmed, Huson Joher Ali, 2014. "Permanent and transitory oil volatility and aggregate investment in Malaysia," Energy Policy, Elsevier, vol. 67(C), pages 552-563.
    19. Jesser Roberto Paladines Amaiquema, 2017. "Is Ecuador Real Gross Domestic Product per Capita and Other Macroeconomic Variables Cointegrated? An Autoregressive Distribution Lag Bound Test Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 9-13.
    20. Sanginabadi, Bahram, 2021. "Oil and Mortality," OSF Preprints j2xqw, Center for Open Science.

    More about this item

    Keywords

    energy demand; energy price; price control; cash subsidy; computable general equilibrium; CGE;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:95826. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.