Evaluating the Impact of Reforming the Food Subsidy Program in Egypt: A Mixed Demand Approach

Posted: 12 Jul 2018

See all articles by Racha Ramadan

Racha Ramadan

Cairo University - Faculty of Economics & Political Science; Economic Research Forum (ERF)

Alban Thomas

University of Toulouse 1 - Toulouse School of Economics (TSE); delete

Date Written: 2001

Abstract

Food subsidy is one of the policies considered to protect consumer welfare against food price increases, in particular when the insufficient local production has to be complemented by food imports with volatile prices. Egypt has experienced several ‘‘food crises’’ (the latest in 2008), which put an halt to attempts to reform in depth the system of food subsidies because of social unrest. In this paper, we use a Mixed Demand approach to analyze the consumption structure of Egyptian households. Our model specification takes into consideration the characteristics of the Egyptian food subsidy system, where some food items have predetermined quotas while others are associated with predetermined (subsidized) prices. Price, income and quota elasticities are estimated from the Egyptian family expenditure survey, and welfare change measures are derived by income class. Simulations of various options to eliminate subsidies on selected food items are conducted. We estimate the negative welfare impact of the reforms, especially in the context of increasing food prices, by comparing welfare effects of policy options by income quar- tiles and by household category (rural, urban).

Suggested Citation

Ramadan, Racha and Thomas, Alban and Thomas, Alban, Evaluating the Impact of Reforming the Food Subsidy Program in Egypt: A Mixed Demand Approach (2001). Food Policy, No. 36, 2011, Available at SSRN: https://ssrn.com/abstract=3200461

Racha Ramadan (Contact Author)

Cairo University - Faculty of Economics & Political Science ( email )

Cairo University
Giza, Giza
Egypt

Economic Research Forum (ERF) ( email )

21 Al-Sad Al-Aaly St.
(P.O. Box: 12311)
Dokki, Cairo 12311
Egypt

Alban Thomas

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

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