Open AccessREDUCING POVERTY THROUGH SUBSIDIES: SIMULATION OF FUEL SUBSIDY DIVERSION TO NON-FOOD CROPS
Author(s) -
Indra Maipita,
Wawan Hermawan,
Fitrawaty Fitrawaty
Publication year - 2012
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 4
ISSN - 2460-9196
DOI - 10.21098/bemp.v14i4.412
Subject(s) - computable general equilibrium , subsidy , poverty , index (typography) , economics , agricultural economics , agriculture , natural resource economics , economic growth , microeconomics , geography , archaeology , world wide web , computer science , market economy
This paper analyzes the impact of fuel subsidy diversion to Non-Food Crops sector on income levels, using AGEFIS; a Computable General Equilibrium model. Then we proceed to apply the Foster-Greer-Thorbecke (FGT) index to measure the indicators of poverty (head count index, poverty gap index and poverty severity index). The simulation result shows the fuel subsidy diversion to Non-Food Crops sector provides a positive impact on increasing household incomes and poverty reduction. Furthermore, the fuel subsidy diversion to Non-Food Crops sector reduces the poverty of rural household, larger than the urban households. Keywords: Subsidy, poverty, computable general equilibrium, AGEFIS.JEL Classification: C68, E62, I32