IMF Working Papers

The Unequal Benefits of Fuel Subsidies Revisited: Evidence for Developing Countries

By David Coady, Valentina Flamini, Louis Sears

November 25, 2015

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David Coady, Valentina Flamini, and Louis Sears. The Unequal Benefits of Fuel Subsidies Revisited: Evidence for Developing Countries, (USA: International Monetary Fund, 2015) accessed October 10, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Understanding who benefits from fuel price subsidies and the welfare impact of increasing fuel prices is key to designing, and gaining public support for, subsidy reform. This paper updates evidence for developing countries on the magnitude of the welfare impact of subsidy reform and its distribution across income groups, incorporating more recent studies and expanding the number of countries. These studies confirm that a very large share of benefits from price subsidies goes to high-income households, further reinforcing existing income inequalities. The results can also help to approximate the welfare impact of subsidy reform for countries where the data necessary for such an analysis is not available.

Subject: Consumption, Energy pricing, Energy subsidies, Expenditure, Fuel prices, Income, Inflation, National accounts, Prices

Keywords: Consumption, Developing countries, Distribution, East Africa, Electricity connection cost, Energy subsidies, Estimate, Fiscal cost, Fuel price, Fuel prices, Fuel subsidy reform, Income, Income group, Inflation, Kerosene price, Middle East, Middle East and Central Asia, North Africa, Price, Price change, Price movement, Price pass-through, Price subsidy, Price volatility, Price-shifting model, Price-smoothing rule, Sequence price, Sub-Saharan Africa, Tax, Transfer program, Welfare impact, WP

Publication Details

  • Pages:

    25

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2015/250

  • Stock No:

    WPIEA2015250

  • ISBN:

    9781513501390

  • ISSN:

    1018-5941