Abstract 2 The Welfare Effects of Reform in Food Subsidy Policy in Iran: Application of Computable General Equilibrium Mode

Document Type : Research Paper

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Abstract

Government's payment of subsidies is a supporting policy for social and economic sectors. A goal of establishing social subsidies is protection of low-income groups and increasing welfare. In recent years، the government has taken steps in way of reforming and reduction of food subsidy. Impacts of Iranian food subsidy reform policies on household welfare are investigated in this study، using a Social Accounting Matrix (SAM) based on Computable General Equilibrium (CGE). The SAM belongs to 2000. The result showed that cash payment of food subsidy has increased household welfare، but untargeted of food subsidy did not reduce expenditure of government. Therefore، the expenditure of food subsidies by the government must be considered as well as the household's welfare. It is suggested that the cash payments to food subsidies should be targeted to low income groups.

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