The impact of Energy Carrier Subsidies on Government Budget Deficits in Selected Countries with an Emphasis on Iran

Miry, Soheila; Mehnatfar, Yousef

doi:10.22034/jmek.2024.452904.1125

The impact of Energy Carrier Subsidies on Government Budget Deficits in Selected Countries with an Emphasis on Iran

Document Type : Original Article

Authors

soheila miry ¹

Yousef Mehnatfar ²

¹ PhD student, Department of Economics, Faculty of Economic and Administrative Sciences, Mazandaran University, Mazandaran, Iran.

² Associated Professor of Economics, Department of Economics, University of Mazandaran, Babolsar, Iran

10.22034/jmek.2024.452904.1125

Abstract

Subsidies are economic tools through which governments intervene to achieve specific market goals. By distorting prices on the economic sectors, they have irreversible effects on the optimal allocation of resources and budget deficits. They limit the effectiveness of governments' economic policies in tackling macroeconomic problems such as unemployment and inflation. Subsidies on energy carriers and their impact on the budget deficit are therefore of great importance. The main purpose of this article is to examine the effect of energy carriers subsidies on government deficit among selected countries. For this purpose, the statistical data for the period 2018-2000 and the Generalized Moments Model (GMM) were used. The findings of this study show that energy carrier subsidies have a positive and significant effect on government deficit in selected countries. Governments should apply appropriate policies with price and guidance tools to be effective in reducing government spendings and expenditures.

Keywords

Energy Carriers Subsidies

Government Expenditures

Government Budget Deficits

Subjects