Ying, Loo Sze and Harun, Mukaramah (2018) Effect of integrating direct cash aid into fuel subsidy removal in the domestic commodity market in Malaysia using Computable General Equilibrium (CGE) model. International Journal of Management Studies (IJMS), 25 (2). pp. 91-109. ISSN 0127-8983

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Abstract

Direct cash aid has been introduced to protect the poor from the impact of rising fuel prices in efforts to remove subsidies in Malaysia. Thus, this paper is aimed at evaluating the changes in prices and quantities of consumer commodities produced by 17 sectors in response to the integration of direct cash aid into fuel subsidy removal. Specifically, the direct cash aid was a reallocation of saved resources through the complete removal of fuel subsidy. This study was carried out using the Lofgren-based computable general equilibrium (CGE) model, by simulating the before and after imposition of fiscal integration. With the withdrawal of government fuel subsidy, the findings showed that recipients of the cash aid tended to spend on basic necessities such as food and beverages, and petrol (for individual vehicle consumption). Nonetheless, the sudden increase in consumer expenditure led to higher consumer prices as current supplies was unable to catch up with increase in demand. Thus, it is advisable to have other effective, concurrent development programs to stimulate future economic development.

Item Type:	Article
Uncontrolled Keywords:	Fuel subsidy removal, Direct cash aid, Computable general equilibrium (CGE) model.
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions:	School of Business Management
Depositing User:	Mrs. Norazmilah Yaakub
Date Deposited:	23 Apr 2020 07:00
Last Modified:	23 Apr 2020 07:00
URI:	https://repo.uum.edu.my/id/eprint/26954

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