AN EVALUATION OF THE ECONOMIC-EFFECTS OF HIGHER ENERGY PRICES IN MEXICO

The analysis of this study examines the impact of an increase in the p rices of gasoline and electricity on the Mexican economy. The analytic al approach used consists of a general equilibrium model composed of 1 3 producing sectors, 14 consuming sectors, 4 household categories clas sified by income and one government, The effects of the recently imple mented increase in the price of gasoline and electricity of 26.2% on p rices and quantities are examined, The results are revealing, For exam ple, the consequences of an increase in the prices of gasoline and ele ctricity would be a decrease in output by all producing sectors of abo ut 0.31%, a fall in the consumption of goods and services by about 0.5 6%, a reduction in total utility by 1.29% and higher revenue for the g overnment of 0.31%, When subjected to a sensitivity analysis, the resu lts are reasonably robust with regard to the assumption of the values of the substitution elasticities. (C) 1997 Elsevier Science Ltd.