Egypt

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.

Bibliographic Details

Main Authors:	Griffin, Peter, Laursen, Thomas, Robertson, James
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2016-02
Subjects:	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,
Online Access:	http://documents.worldbank.org/curated/en/2016/02/25946391/egypt-guiding-reform-energy-subsidies-long-term https://hdl.handle.net/10986/23890
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