IDEAS home Printed from https://ideas.repec.org/p/cop/wpaper/g-317.html
   My bibliography  Save this paper

Effect of Gas Subsidies In Indonesia

Author

Listed:
  • Mark Horridge
  • Elizabeth L. Roos

Abstract

Countries that export energy or minerals often feel that they would be richer if the commodities could be processed onshore rather than overseas. In this way, it is thought, 'value-adding' could occur locally, raising local GDP. Such countries may subsidize local use of the exportable commodity. The strategy, which involves 'picking winners', is not obviously sensible. Why not sell at the higher, export, price? If a subsidy to local industry were needed, why not offer an explicit subsidy, rather than a hidden subsidy in the form of cheaper inputs. A more orthodox economic approach would stress that prosperity is based on: * human capital (a skilled and well-educated workforce); * good infrastructure (eg, good roads and reliable electricity); * good governance (not too much red tape or corruption); * and, with luck, valuable natural resources! The focus of this study is Indonesia's effort to use more natural gas locally rather exporting it. To further this aim, domestic users are offered natural gas at a price below the export (world) price. There is in effect a subsidy to local use of natural gas. Using INDORANI, a computable general equilibrium (CGE) model of Indonesia, we simulate the effect of removing this subsidy.

Suggested Citation

  • Mark Horridge & Elizabeth L. Roos, 2021. "Effect of Gas Subsidies In Indonesia," Centre of Policy Studies/IMPACT Centre Working Papers g-317, Victoria University, Centre of Policy Studies/IMPACT Centre.
  • Handle: RePEc:cop:wpaper:g-317
    as

    Download full text from publisher

    File URL: https://www.copsmodels.com/ftp/workpapr/g-317.pdf
    File Function: Initial version, 2021-08
    Download Restriction: no

    File URL: https://www.copsmodels.com/elecpapr/g-317.htm
    File Function: Local abstract: may link to additional material.
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mark Horridge & Michael Jerie & Dean Mustakinov & Florian Schiffmann, 2019. "GEMPACK manual," Centre of Policy Studies/IMPACT Centre Working Papers gpman, Victoria University, Centre of Policy Studies/IMPACT Centre.
    2. Anonymous, 1956. "International Monetary Fund," International Organization, Cambridge University Press, vol. 10(2), pages 318-319, May.
    3. R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," Review of Economic Studies, Oxford University Press, vol. 24(1), pages 11-32.
    4. Anonymous, 1956. "International Monetary Fund," International Organization, Cambridge University Press, vol. 10(1), pages 203-206, February.
    5. Mark Horridge, 2000. "ORANI-G: A General Equilibrium Model of the Australian Economy," Centre of Policy Studies/IMPACT Centre Working Papers op-93, Victoria University, Centre of Policy Studies/IMPACT Centre.
    6. Anonymous, 1956. "International Monetary Fund," International Organization, Cambridge University Press, vol. 10(3), pages 483-483, August.
    7. Anonymous, 1956. "International Monetary Fund," International Organization, Cambridge University Press, vol. 10(4), pages 636-639, November.
    Full references (including those not matched with items on IDEAS)

    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. Maurice Obstfeld, 2009. "International Finance and Growth in Developing Countries: What Have We Learned?," NBER Working Papers 14691, National Bureau of Economic Research, Inc.
    2. Michael Michaely, 1971. "An Over-all View of Policy Patterns," NBER Chapters, in: The Responsiveness of Demand Policies to Balance of Payments: Postwar Patterns, pages 30-70, National Bureau of Economic Research, Inc.
    3. Kristin Forbes & Ida Hjortsoe & Tsvetelina Nenova, 2017. "Current Account Deficits During Heightened Risk: Menacing or Mitigating?," Economic Journal, Royal Economic Society, vol. 0(601), pages 571-623, May.
    4. Kathryn M.E. Dominguez, 1993. "The Role of International Organizations in the Bretton Woods System," NBER Chapters, in: A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform, pages 357-404, National Bureau of Economic Research, Inc.
    5. Javier G. Gómez-Pineda, 2016. "La flotación de 1957 y la estabilidad macroeconómica," Borradores de Economia 938, Banco de la Republica de Colombia.
    6. Kwabena Asomanin Anaman & Irene Susana Egyir, 2019. "Economic Shocks and the Growth of the Construction Industry in Ghana Over the 50-Year Period From 1968 to 2017," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(1), pages 1-16, June.
    7. Eman Khorsheed, 2020. "The Impact of Women Parliamentarians on Economic Growth: Modelling & Statistical Analysis of Empirical Global Data," International Journal of Statistics and Probability, Canadian Center of Science and Education, vol. 9(3), pages 1-23, May.
    8. Alexandre Rands Barros, 2005. "The Impact Of State Owned Banks On Interest Rates Spread," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33rd Brazilian Economics Meeting] 041, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    9. Mr. Philip R. Gerson, 1998. "The Impact of Fiscal Policy Variables on Output Growth," IMF Working Papers 1998/001, International Monetary Fund.
    10. Luis Vildosola, 2004. "Modelo para valorar la atribución de Sustentabilidad," GE, Growth, Math methods 0401001, University Library of Munich, Germany.
    11. Ashoka Mody & Diego Saravia, 2009. "From Crisis to IMF-Supported Program: Does Democracy Impede the Speed Required by Financial Markets?," Working Papers Central Bank of Chile 513, Central Bank of Chile.
    12. Fitawek, Wegayehu, 2016. "The Effect Of Export Tax On The Competitiveness Of Ethiopia’S Leather Industry," Research Theses 265673, Collaborative Masters Program in Agricultural and Applied Economics.
    13. Ella Kavanagh, 2018. "Evolving Central Bank thinking: the Irish Central Bank, 1943-69," Working Papers 18022, Economic History Society.
    14. Mr. James M. Boughton, 2006. "American in the Shadows: Harry Dexter White and the Design of the International Monetary Fund," IMF Working Papers 2006/006, International Monetary Fund.
    15. David James Gill, 2015. "Rating the UK: the British government's sovereign credit ratings, 1976–8," Economic History Review, Economic History Society, vol. 68(3), pages 1016-1037, August.
    16. Mr. James M. Boughton, 2004. "The IMF and the force of History: Ten Events and Ten Ideas that Have Shaped the Institution," IMF Working Papers 2004/075, International Monetary Fund.
    17. Javier G. Gómez-Pineda, 2016. "Inflación de costos: las devaluaciones de los años cincuenta y el brote populista de 1963," Borradores de Economia 924, Banco de la Republica de Colombia.
    18. Elsadig Musa Ahmed, 2008. "Foreign Direct Investment Intensity Effects On Tfp Intensity Of Asean 5 Plus 2," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 33(2), pages 155-166, December.
    19. Musoni J. Rutayisire, 2010. "Economic Liberalization, Monetary Policy and Money Demand in Rwanda: 1980–2005," Working Papers 193, African Economic Research Consortium, Research Department.
    20. Christopher Bajada, 2002. "Estimating The Uses Of Currency In Australia," Economic Papers, The Economic Society of Australia, vol. 21(3), pages 14-30, September.

    More about this item

    Keywords

    Regional modelling; gas subsidies; Indonesia;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:cop:wpaper:g-317. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/cpmonau.html .

    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: Mark Horridge (email available below). General contact details of provider: https://edirc.repec.org/data/cpmonau.html .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.