Advanced Search
MyIDEAS: Login

The Unequal Benefits of Fuel Subsidies

Contents:

Author Info

  • David Coady
  • Javier Arze del Granado

Abstract

This paper reviews evidence on the impact of fuel subsidy reform on household welfare in developing countries. On average, the burden of subsidy reform is neutrally distributed across income groups; a $0.25 decrease in the per liter subsidy results in a 6 percent decrease in income for all groups. More than half of this impact arises from the indirect impact on prices of other goods and services consumed by households. Fuel subsidies are a costly approach to protecting the poor due to substantial benefit leakage to higher income groups. In absolute terms, the top income quintile captures six times more in subsidies than the bottom. Issues that need to be addressed when undertaking subsidy reform are also discussed, including the need for a new approach to fuel pricing in many countries.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=24184
Download Restriction: no

Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 10/202.

as in new window
Length: 23
Date of creation: 01 Sep 2010
Date of revision:
Handle: RePEc:imf:imfwpa:10/202

Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Email:
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC

Order Information:
Web: http://www.imf.org/external/pubs/pubs/ord_info.htm

Related research

Keywords: Developing countries; Income distribution; Oil prices; Oil pricing policy; Oil subsidies; Price increases; Private consumption; Welfare; subsidies; fuel prices; subsidy; fuel price; fuel consumption; fuel products; fuel pricing; safety net; petroleum pricing; fuel taxes; leakage of subsidy; cash transfers; safety net program; cash transfer; oil pricing; oil producing countries; fuel source; vulnerable groups; safety net programs; oil exporting countries; energy information administration; oil-producing countries; extractive industries; gasoline subsidies; social safety net; fossil fuel; price subsidies; oil producing; food subsidy; automatic fuel; fuel tax; fuel substitution; effective safety net programs;

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Pradiptyo, Rimawan & Sahadewo, Gumilang Aryo, 2012. "A growing pain: an experimental approach to discover the most acceptable strategy for lifting fuel subsidy scheme in Indonesia," MPRA Paper 37073, University Library of Munich, Germany.
  2. Kojima, Masami, 2013. "Petroleum product pricing and complementary policies: experience of 65 developing countries since 2009," Policy Research Working Paper Series 6396, The World Bank.
  3. Tahsin Saadi Sedik & Serhan Cevik, 2011. "A Barrel of Oil or a Bottle of Wine," IMF Working Papers 11/1, International Monetary Fund.
  4. Cuesta, Jose, 2013. "Social spending, distribution, and equality of opportunities : opportunity incidence analysis," Policy Research Working Paper Series 6489, The World Bank.
  5. Howes, Stephen & Wyrwoll, Paul, 2012. "Climate Change Mitigation and Green Growth in Developing Asia," ADBI Working Papers 369, Asian Development Bank Institute.
  6. Kojima, Masami, 2013. "Drawing a roadmap for oil pricing reform," Policy Research Working Paper Series 6450, The World Bank.
  7. Dartanto, Teguh, 2013. "Reducing fuel subsidies and the implication on fiscal balance and poverty in Indonesia: A simulation analysis," Energy Policy, Elsevier, vol. 58(C), pages 117-134.
  8. Lopez-Claros, Augusto, 2014. "Fiscal challenges after the global financial crisis : a survey of key issues," Policy Research Working Paper Series 6805, The World Bank.
  9. Raphael Espinoza, 2012. "Government Spending, Subsidies and Economic Efficiency in the GCC," OxCarre Working Papers 095, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  10. Kojima, Masami, 2012. "Oil price risks and pump price adjustments," Policy Research Working Paper Series 6227, The World Bank.
  11. Plante, Michael, 2011. "The long-run macroeconomic impacts of fuel subsidies in an oil-importing developing country," MPRA Paper 33823, University Library of Munich, Germany.
  12. James B. Davies & Xiaojun Shi & John Whalley, 2012. "The Possibilities for Global Inequality and Poverty Reduction Using Revenues from Global Carbon Pricing," University of Western Ontario, Economic Policy Research Institute Working Papers 20127, University of Western Ontario, Economic Policy Research Institute.
  13. Pradiptyo, Rimawan & Sahadewo, Gumilang Aryo, 2012. "On The Complexity of Eliminating Fuel Subsidy in Indonesia; A Behavioral Approach," MPRA Paper 40045, University Library of Munich, Germany.
  14. Charles E. McLure, Jr., 2013. "Reforming Subsidies for Fossil Fuel Consumption: Killing Several Birds with One Stone," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1312, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  15. Stephen Howes & Paul Wyrwoll, 2012. "Climate Change Mitigation and Green Growth in Developing Asia," Working Papers id:5059, eSocialSciences.
  16. Vagliasindi, Maria, 2012. "Implementing energy subsidy reforms : an overview of the key issues," Policy Research Working Paper Series 6122, The World Bank.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:10/202. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.