Abstract for: An Investigation on The Process of Modification of Subsidy Policy

In recent years, increase in energy price in international markets has turned paying energy subsidy into a serious challenge, because those countries paying subsidies are in constant pressure (Gupta 2003)[6,7]. Rise in energy price and demand in those countries has resulted in earnest problems in energy pricing (Davis 2001)[4]. Besides, subsidy elimination and imparting the resulted money to the society, without planning for solving its short-term and long-term consequent problems, will lead to public dissatisfaction as well as industrial performance downturn and also it will cause inflation[5]. In this paper while offering a comprehensive model for this problem and dynamic analysis of the policies implemented so far and also investigation of those policies in short-term and long-term frames, another policy is suggested for solving this problem which not only guarantees industrial development and increase in public welfare level but also will gradually remove energy subsidy from government budget and thus will help the government to get rid of this intolerable burden.