The Effects of Elimination of Energy Subsidy on Economic Growth in Iran

Determine of the ceiling price in the energy market compensation through paid direct and indirect subsidies be in order to boost economic growth and avoiding increases in the general level of prices. This policy have been revised in the past two decades, with issues of social and environmental costs. But in the long run, this policy will continue in Iran. In this study, tried with using a computable general equilibrium and social accounting matrix 1380, through various scenarios of reduce energy subsides and cash subsidies in the GAMS software package, to assess the effect of eliminating energy subsides on the country, s economic growth. The results showed that in the first scenario that, increase energy price till 20 and 140 percentage, economic growth, respectively increase 1.2 and 20.90 percentage but with increase of cash payment of energy subsidy reduced, the percentage of increase of economic growth. Through in the last scenarios with cash of 550000 rials of energy subsidies and increase energy price till 20 and 140 percentage, economic growth respectively increase 0.64 and 20.48 persentage.