The Economy-wide Impact of Controlling Energy Consumption in Indonesia: An Analysis Using a Social Accounting Matrix Framework

Escalating oil prices and the need to control carbon emissions sound the alarm for Indonesia to reduce or be more efficient in its energy use. To create an incentive for society to be more energy efficient, the government needs to reduce the current energy subsidy, which, in any case, has imposed a tremendous fiscal burden on the country. This paper aims to analyse the impact on the economy of energy policies aiming to reduce and to improve the efficiency of energy use, particularly on the income of various household groups. This paper will, first, construct a Social Accounting Matrix for Indonesia with detailed energy sectors and, second, utilise various multiplier analyses to observe and understand the impact of these energy policies.