Abstract:
n present study, the impacts of production subsidies elimination on production, export, import, employment, and different macroeconomic variables have been evaluated based on a Computable General Equilibrium model (CGE) for Iran's economy. The model applied the Iranian input-output table data of year 2002. Three scenarios include 25, 50, and 100 percent reduction in production subsidizing rate were analyzed, respectively. Results did not show any significant change in production and employment rate in oil and mineral production sectors, but implied a reduction in production, employment rate and exports of industry, agriculture and service in all scenarios. It found the food industry was the most vulnerable part of Iran's economy, so paying more attention to growth rate of agriculture and food industry may inevitably facilitate the elimination policy of production subsidies. With regard to negative consequences of production subsidies elimination overall agricultural sector, the agricultural products need more support on productivity growth in factors of production.
Machine summary:
"For the main simulation reported here, the exogenous variables were (Horridge, 2003): All tax rates, all technological coefficients, Industry-specific use of capital and land, CPI-indexed wages, import prices, position of export demand curves, and the exchange rate, Components of absorption: aggregate investment, household consumption, and government demand.
6- Conclusion Present study attempts to evaluate impacts of production subsides reduction and elimination on production, employment, exports, and imports in different sections of Iranian economy applying a computable general equilibrium framework (CGE).
Table 1: Aggregated Section Used for this Report Broad groups Original 91 sections 1 Agriculture Wheat Rice Paddy SugrBeetCane OthIndstCrop OthFarming Livestock Poultry Fishing Honey Etc Wood ForstPrd 2 Crude Oil & Natural Gas Crude_NatGas NaturalGas 3 Mining Coal IronOre CopperOre BldingStones OthOres 4 Food Processing DairyProds Sugar Oils_Fats AnimalFeeds Tobacco_Cigs OthFoodProds 5 TCF TextilesEtc Carpets_Rugs Clothing Footwear 6 Metal Products BasIronSteel Copper_Prods OthNFerMtlPr MetlForIndCn 7 Machinery & Equipment IndustMchnry AgricMachnry RadioTvEqp MotorVhicles 8 Other Manufacturing PaperPulp Print_Pblish PaperProds SawmillProds WoodStrawPrd Cement GlassProds OthNonMtlMin ChemicalFert Plastc_MMFbr Pharmaceutcl OilProds RbbrPlstcPrd OthChemPrd OthManPrd 9 Utilities Electricity Water 10 Construction Infrastruct ResBuildings OthConstruct 11 Trade & Transport TradeWholRtl DistGas_Oil RestrantCafe HotelsAccom FreightTrans RoadP_AirTrn TransportSvc 12 Private Services Communcation FinanclInst RealEstate BusinessSvc ReligiousEtc ArtsCultSprt RepairSvc OthSvc 13 Public Services PublicAdmin MilitPolice HigherEdRsch PublicEducn TechVocEducn HospitalsEtc VetrinarySvc CharitySvc publicHospital private Hospital privateEducn Statistical Center of Iran, input-output table, 2007 Table 2: Short-Run Macro Effects of Decreased Production Subsidy Rate Description Symbol 25% decreased subsidy rate 50% decreased subsidy rate 100% decreased subsidy rate Aggregate employment: wage bill weights employ_i -7."