## Economic Determinants of Government Subsidies

_IMF Working Papers, December 1, 1998_

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## Bibliographic details
- Authors: Benedict J. Clements, Hugo Rodríguez, Gerd Schwartz
- Published: December 1, 1998
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451979664.001

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### Summary and main findings
- The paper studies the economic determinants of government subsidies using panel data for 40 countries over 18 years (from 1975 to 1992).
- Individual country-specific factors play a sizeable role in determining government subsidies.
- Characteristics that may make it easier to keep subsidy expenditures down:
  - a small government,
  - a small external current account deficit,
  - a productive structure geared more toward services and agriculture than manufacturing.
- Globalization and the associated increase in openness are not impediments to reducing subsidies.
- An IMF-supported adjustment program, in itself, is found not to be a significant determinant of government subsidy expenditures.

### Data, methods, and scope
- Data: panel data for 40 countries over 18 years (from 1975 to 1992).
- Methods and concepts referenced in the metadata: Econometric analysis, Logit models, subsidy equation, optimization problem.
- Subject classifications listed: Econometric analysis, Expenditure, Government subsidies, Logit models, National accounts, Total expenditures.
- Keywords provided: government, government assistance, government expenditures, government interest expenditures, government intervention, government subsidies, government subsidization policy, government subsidy expenditure, government transfer, interest expenditures, Logit models, non-resident government unit, optimization problem, subsidization policy, subsidy equation, subsidy expenditure, Total expenditures, WP.

### Key statistics and publication metadata
- Pages: 32
- Volume: 1998
- Issue: 166
- Series: Working Paper No. 1998/166
- DOI: https://doi.org/10.5089/9781451979664.001
- Stock No: WPIEA1661998
- ISBN: 9781451979664
- ISSN: 1018-5941
- Publication date listed on the landing page: December 1, 1998
- Authors: Benedict J. Clements, Hugo Rodríguez, Gerd Schwartz

### Policy implications and interpretation
- Policy focus implied by findings:
  - Reducing the size of government may help contain subsidy expenditures.
  - Maintaining a small external current account deficit may facilitate lower subsidy spending.
  - Economic structures with greater emphasis on services and agriculture (relative to manufacturing) may be associated with lower subsidy expenditures.
  - Openness and greater globalization need not be barriers to subsidy reduction.
  - Participation in an IMF-supported adjustment program does not, by itself, predict lower or higher subsidy expenditures.

*IMF Working Papers — Economic Determinants of Government Subsidies (Working Paper No. 1998/166) — Benedict J. Clements, Hugo Rodríguez, Gerd Schwartz*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/economic-determinants-of-government-subsidies-2836_