Investigating Impact of Real Natural Gas Prices on Inflation, Welfare Index and Carbon Emission in Iran: A Dynamic Computable General Equilibrium Model Approach

Document Type : Original Article

Authors

1 MSc in Energy Economics, Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran

2 Professor of Economics, Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran

3 Associate Professor of Economics, Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran

Abstract

The purpose of this research is: What are the effects of modification of natural gas prices for domestic consumers on macroeconomic variables and Carbon emission? The dynamic computable general equilibrium models have been, used. In this study, to investigate the effects of modifying the price of natural gas. The first scenario, an effect of 10% increase and in the second scenario, an effect of 30% increase in natural gas prices is seen. To emphasize the reliability of the model, systematic sensitivity analysis based on parameter change, the Armington Elasticity, is done. The results indicate the efficiency of the estimated model. The results also show a relatively low impact of natural gas prices on inflation, as well as stabilization of carbon emissions in the future. This price increase will lead to a good growth in the process of improving the welfare index up to the horizon of 2030. In general, modifying of the price of natural gas has positive effects on welfare. Overall, the modification of natural gas prices has positive welfare effects The important point of the policy, which is based on considering the scenarios and the problem of stagflation, correction of the natural gas prices should be done gradually and with a specific schedule.

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References

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