Economic Determinants of Government Subsidies

By Benedict J. Clements, Hugo Rodríguez, Gerd Schwartz

December 1, 1998

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Benedict J. Clements, Hugo Rodríguez, and Gerd Schwartz. Economic Determinants of Government Subsidies, (USA: International Monetary Fund, 1998) accessed September 18, 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

The paper studies the economic determinants of government subsidies using panel data for 40 countries over 18 years (from 1975 to 1992) and finds that individual country-specific factors play a sizeable role in determining government subsidies. But it also suggests several characteristics—a small government, a small external current account deficit, and a productive structure geared more toward services and agriculture than manufacturing—may make it easier to keep subsidy expenditures down. The paper also suggests that globalization and the associated increase in openness are not impediments to reducing subsidies. In itself, an IMF-supported adjustment program is found not to be a significant determinant of government subsidy expenditures.

Subject: Econometric analysis, Expenditure, Government subsidies, Logit models, National accounts, Total expenditures

Keywords: 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

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1998/166
Stock No:

WPIEA1661998
ISBN:

9781451979664
ISSN:

1018-5941

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