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How Large Are Global Energy Subsidies?

Author

Listed:
  • David Coady
  • Ian W.H. Parry
  • Louis Sears
  • Baoping Shang

Abstract

This paper provides a comprehensive, updated picture of energy subsidies at the global and regional levels. It focuses on the broad notion of post-tax energy subsidies, which arise when consumer prices are below supply costs plus a tax to reflect environmental damage and an additional tax applied to all consumption goods to raise government revenues. Post-tax energy subsidies are dramatically higher than previously estimated, and are projected to remain high. These subsidies primarily reflect under-pricing from a domestic (rather than global) perspective, so even unilateral price reform is in countries’ own interests. The potential fiscal, environmental and welfare impacts of energy subsidy reform are substantial.

Suggested Citation

  • David Coady & Ian W.H. Parry & Louis Sears & Baoping Shang, 2015. "How Large Are Global Energy Subsidies?," IMF Working Papers 15/105, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:15/105
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    References listed on IDEAS

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    More about this item

    Keywords

    Energy sector; Subsidies; Energy prices; Consumption taxes; Fiscal reforms; Sensitivity analysis; energy subsidies; efficient taxation; deadweight loss; revenue; subsidies; tax; vehicle; traffic; subsidy; Demand and Supply; Government Policy;

    JEL classification:

    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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