Griffin, PeterLaursen, ThomasRobertson, James2016-03-092016-03-092016-02https://hdl.handle.net/10986/23890This 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.en-USCC BY 3.0 IGOSANITATIONEMPLOYMENTNATURAL GAS OUTPUTFUEL SUBSIDIESGOVERNMENT EXPENDITURESPOWER PLANTSOIL PRICEADVERSE IMPACTSINCOMEACTIVITIESGENERATIONREAL GDPBALANCE OF PAYMENTSEXPORTSELASTICITYGAS PRICESDOMESTIC NATURAL GASGASOLINEENERGY PRODUCTSECONOMIC IMPLICATIONSINCENTIVESEQUILIBRIUMGASSUBSIDYPRICETAXINPUTSOIL PRODUCTIONPAYMENTSDISTRIBUTION OF ENERGYTRADE BALANCELNGOIL PRICESPETROLEUMTOTAL FACTOR PRODUCTIVITYNATURAL GAS PRICESCOSTSOILPOWER GENERATIONELECTRIC POWER PLANTSHIGHER ENERGY PRICESTRANSPORTPOWER SECTORREFINED PETROLEUM PRODUCTSMOBILITYBASE YEARCRUDE OIL PRODUCTIONOIL PRODUCTSWATERHIGH ENERGYBUDGET DEFICITSTOTAL COSTSSTATIC ANALYSISPRICE SUBSIDIESSUBSIDIESTAXESPRODUCTIVITY GROWTHCONSUMPTIONVALUE ADDEDTRANSPORTATIONECONOMIC PERFORMANCECAPITALWAGESINTERNATIONAL TRADEELECTRIC POWERBALANCEPRICE ELASTICITIESOIL PRODUCERELECTRIC POWER GENERATIONUTILITIESVALUEWAGE RATESPOWERELECTRICITYCEMENTELASTICITIESMACROECONOMICSTRADE DEFICITECONOMIC SECTORSDRY NATURAL GASGAS PRODUCERELECTRICITY GENERATIONPRICE CHANGESENERGY EXTRACTIONAGRICULTURECONSUMERSECONOMIC EFFICIENCYOIL PRODUCERSCOST OF ENERGYMEASUREMENTGAS OUTPUTENERGY USEDYNAMIC ANALYSISBENCHMARKENERGY PRICESFIXED PRICESTAX REVENUEELECTRICITY PRICESCAPITAL USETRADENATURAL GASGDPGOODSGOVERNMENT SUBSIDIESGROWTH RATEOIL EXPORTERSINVESTMENTTOTAL FACTOR PRODUCTIVITY GROWTHCONTROLLED PRICESDOMESTIC ENERGYADVERSE IMPACTCOALDIESEL FUELCRUDE OILFUELFUEL OILINVESTMENTSPETROLEUM PRODUCTSTRANSPORT COSTSFULL EMPLOYMENTDIESELMACROECONOMIC PERFORMANCEENERGY COSTSPRICESAPPROACHPRODUCTION COSTSENERGYDEVELOPMENT POLICYINCOME GROUPSNATURAL GAS PRICINGWorking PaperWorld Bank10.1596/1813-9450-7571