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Abstract
This paper estimates the pattern of consumer expenditures in Iran in an attempt to measure the welfare cost of price subsidies in that country and shed light on possible fiscal reforms. We use the Quadratic Almost Ideal Demand System (Banks et al. (1997)) as our framework for estimation. We show that the general equilibrium fiscal interaction effects play a crucial role in determining the amount the government saves by eliminating the price subsidy of a particular good. Interestingly, eliminating price subsidies on utilities saves the government little by way of revenues and is welfare reducing. Comparing the gains for non-marginal with marginal reforms a la Ahmad and Stern (1984), we also show that the two approaches may not necessarily recommend the same reform.

Canadian ethanol production is currently derived from grain. Ethanol is criticized for displacing food production and not significantly reducing greenhouse gases. Second-generation ethanol from lignocellulosic feedstocks, such as fast-growing trees, are promoted as being more effective at reducing greenhouse gases without compromising food supplies. However, a second-generation ethanol industry may not be cost-effective with regard to greenhouse gas reduction. This study examines obstacles to a commercial second-generation ethanol industry, the potential for success, and the policy implications of promoting Canadian second-generation ethanol production.