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The Distributional Effects of Oil Price Changes on Household Income: Evidence from Mali

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  • Kangni Kpodar
  • Calvin Djiofack

Abstract

Many net oil-importing developing countries, particularly African economies, have faced economic difficulties with high oil price increases. As a case study, this paper assesses the distributional effects of a rise in various petroleum product prices in Mali using a standard computable general equilibrium model. The results suggest that rising diesel prices primarily affect richer households, while the poorest ones tend to suffer more from higher kerosene and gasoline prices. Overall, the impact of fuel prices on household budgets shows a U-shaped relationship with expenditure per capita. Regardless of the oil product considered, high-income households benefit disproportionately from oil price subsidies. This suggests that petroleum price subsidies are ineffective in protecting the income of poor households compared with a targeted subsidy. Copyright 2010 The author 2009. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

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  • Kangni Kpodar & Calvin Djiofack, 2010. "The Distributional Effects of Oil Price Changes on Household Income: Evidence from Mali," Journal of African Economies, Centre for the Study of African Economies, vol. 19(2), pages 205-236, March.
    • Handle: RePEc:oup:jafrec:v:19:y:2010:i:2:p:205-236
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    1. Kpodar, Kangni & Liu, Boya, 2022. "The distributional implications of the impact of fuel price increases on inflation," Energy Economics, Elsevier, vol. 108(C).
    2. Pierre Joubert NGUETSE & Célestin SIKUBE TAKAMGNO & Éric Ledoux NEGUEM, 2018. "The Impact of the Liberalization of Petroleum Product Prices on the Economy of Cameroon," Working Papers 346, African Economic Research Consortium, Research Department.

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