The Effect of Production Subsidies Elimination on Agricultural Sector Using General Equilibrium Model

Document Type : Research Article

Authors

• F. Alijani ¹
• M. Salarpour ²
• M. Sabouhi ¹

¹ Department of Agricultural Economic, Faculty of Agriculture, University of Zabo

² Department of Agricultural Economics, Zabol University, Zabol, Iran

10.22067/jead2.v1391i3.17778

Abstract

Considering the importance of the impact of subsidy reform on the agricultural sector, the study aimed at understanding consequences of changes in the rates of production subsidy using General equilibrium model based on input-output table in the year 2001.The study conducted based on three scenarios containing step, down and finally removed rates of production subsidy. The effects on production, value added, employment, export and import activities in the agricultural sector were analyzed. Results showed that production, value added and export of cultivation, livestock and poultry activities have been reduced more than other activities in the field. Results also showed that employment in sub-sections of the agricultural sector and paltry activities have been reduced. Furthermore, elimination of production subsidies had a negative impact on the fish imports, while the impact was positive for imports of other products. Therefore, since the policy had negative impact on the agricultural products, supporting agricultural sector along with reduction in the government’s expenditures is recommended.

Keywords

• Agricultural sector
• Production subsidy
• Computable General Equilibrium

20.1001.1.20084722.1391.26.3.8.9

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