An Analysis of Energy Carrier Prices and Their Effects on the Exports of Industrial Products

Document Type : Research Paper

Authors

1 Assistant Professor, Department of Economics, Shahid Beheshti University

2 . M.A. in Economics, Shahid Beheshti University

Abstract

This paper studies the impact of growth of energy carrier prices on the competitiveness of industrial exports. The extent of increase in domestic price indices was estimated exogenously using an input-output method. We have predicted several export scenarios each over a period of 5 year. According to these scenarios, an increase in the price of energy carriers could bring Iran’s government100 thousand billon Rialsthrough practicing the law of energy subsidy reforms.This revenue could be 200 and 400 thousand billon Rials under the second and third scenarios respectively. The study shows that the energy carrier prices could reach 90% of the average Persian Gulf base price determined in FOB.
According to the first scenario, industrial exports could decrease for around 9 percent in the first year and could grow at a low rate in subsequent years, reaching $15.3 billions in 2014. Under the second scenario, it could decrease for around 16% in the first year and could increase at a low rate, reaching $15.1 billions in 2014. Based on the third scenario, it could decrease about 25% in the first year but reach$14.6 billionsover a period of 5 years.

Keywords