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Egypt : Guiding Reform of Energy Subsidies Long-Term

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World Bank (WB)

Abstract: This paper examines the short- and long-run economic impact of Egypt's energy subsidy reform in July 2014 (without and without compensating transfers for the bottom 40 percent of the income distribution) and the decline in global energy prices, as well as the long-run impact of phasing out the energy subsidies over a 5 year period. The analysis uses a Computable General Equilibrium model with 56 productive sectors, including 11 energy subsectors. The short-run analysis employs a two-stage factor market adjustment, with wages first fixed and then flexible. The long-run analysis is run in a recursive dynamic mode, capturing the impact of improved productivity and increased investment resulting from more efficient allocation of resources and reduction in government deficits. In the short run, the 2014 reforms lead to slightly lower consumption while investment increases strongly and production shifts from highly subsidized energy-intensive sectors such as energy, water and sanitation, and transport to other sectors (notably construction). The impact on overall consumer prices is limited. In the longer run, real GDP growth increases by about one percentage point relative to the baseline before the 2014 reform.
Type: Working Paper
Publications & Research
Publications & Research :: Policy Research Working Paper
Link: http://hdl.handle.net/10986/23890
Subject: SANITATION
EMPLOYMENT
NATURAL GAS OUTPUT
FUEL SUBSIDIES
GOVERNMENT EXPENDITURES
POWER PLANTS
OIL PRICE
ADVERSE IMPACTS
INCOME
ACTIVITIES
GENERATION
REAL GDP
BALANCE OF PAYMENTS
EXPORTS
ELASTICITY
GAS PRICES
DOMESTIC NATURAL GAS
GASOLINE
ENERGY PRODUCTS
ECONOMIC IMPLICATIONS
INCENTIVES
EQUILIBRIUM
GAS
SUBSIDY
PRICE
TAX
INPUTS
OIL PRODUCTION
PAYMENTS
DISTRIBUTION OF ENERGY
TRADE BALANCE
LNG
OIL PRICES
PETROLEUM
TOTAL FACTOR PRODUCTIVITY
NATURAL GAS PRICES
COSTS
OIL
POWER GENERATION
ELECTRIC POWER PLANTS
HIGHER ENERGY PRICES
TRANSPORT
POWER SECTOR
REFINED PETROLEUM PRODUCTS
MOBILITY
BASE YEAR
CRUDE OIL PRODUCTION
OIL PRODUCTS
WATER
HIGH ENERGY
BUDGET DEFICITS
TOTAL COSTS
STATIC ANALYSIS
PRICE SUBSIDIES
SUBSIDIES
TAXES
PRODUCTIVITY GROWTH
CONSUMPTION
VALUE ADDED
TRANSPORTATION
ECONOMIC PERFORMANCE
CAPITAL
WAGES
INTERNATIONAL TRADE
ELECTRIC POWER
BALANCE
PRICE ELASTICITIES
OIL PRODUCER
ELECTRIC POWER GENERATION
UTILITIES
VALUE
WAGE RATES
POWER
ELECTRICITY
CEMENT
ELASTICITIES
MACROECONOMICS
TRADE DEFICIT
ECONOMIC SECTORS
DRY NATURAL GAS
GAS PRODUCER
ELECTRICITY GENERATION
PRICE CHANGES
ENERGY EXTRACTION
AGRICULTURE
CONSUMERS
ECONOMIC EFFICIENCY
OIL PRODUCERS
COST OF ENERGY
MEASUREMENT
GAS OUTPUT
ENERGY USE
DYNAMIC ANALYSIS
BENCHMARK
ENERGY PRICES
FIXED PRICES
TAX REVENUE
ELECTRICITY PRICES
CAPITAL USE
TRADE
NATURAL GAS
GDP
GOODS
GOVERNMENT SUBSIDIES
GROWTH RATE
OIL EXPORTERS
INVESTMENT
TOTAL FACTOR PRODUCTIVITY GROWTH
CONTROLLED PRICES
DOMESTIC ENERGY
ADVERSE IMPACT
COAL
DIESEL FUEL
CRUDE OIL
FUEL
FUEL OIL
INVESTMENTS
PETROLEUM PRODUCTS
TRANSPORT COSTS
FULL EMPLOYMENT
DIESEL
MACROECONOMIC PERFORMANCE
ENERGY COSTS
PRICES
APPROACH
PRODUCTION COSTS
ENERGY
DEVELOPMENT POLICY
INCOME GROUPS
NATURAL GAS PRICING




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