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Abstract

This paper investigates the intergenerational welfare impact of raising state administered retail energy prices in Saudi Arabia, an example of an oil exporting country with a fast growing population. To achieve this, we develop a dynamic model with overlapping generations (called MEGIR-SA), which we believe is the first empirical application of its type to be developed for an oil exporting country.

The model is used to analyze the effects of the increase in some Saudi administered energy prices implemented at the end of December 2015.

In particular, the model analyzes how these price increases might affect the welfare of Saudis through a direct increase in energy expenditures, an indirect rise in Saudi public income stemming from a lower domestic demand for oil that fosters oil exports at a given level of domestic oil production, and a direct increase of the turnover of the energy sector.

The analysis suggests that the increase in end-user energy prices results in a net overall favorable effect on the intertemporal welfare of all households.

https://www.iaee.org/en/publications/ejarticle.aspx?id=3355

Energy Journal

Authors

FG

Frederic Gonand

Fakhri Hasanov

Fakhri Hasanov

Research Fellow Fakhri is a research fellow leading the KAPSARC Global Energy Macroeconometric Model (KGEMM) project. Previously, he was an associate professor…

Expertise

  • Applied macroeconometrics
  • energy economics
  • time series modeling and forecasting

Publications See all Fakhri Hasanov’s publications

Iran Sanctions: Implications for the Oil Market

Iran Sanctions: Implications for the Oil Market

This paper investigates the intergenerational welfare impact of raising state administered retail energy prices in Saudi…

May 9, 2019

Estimating the Impact of Energy Price Reform on Saudi Arabian Intergenerational Welfare using the MEGIR-SA Model

This paper investigates the intergenerational welfare impact of raising state administered retail energy prices in Saudi…

April 1, 2019
Lester C. Hunt

Lester C. Hunt

Visiting Researcher

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