The Distributional Implications Of The Impact Of Fuel Price Increases On Inflation
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| Author | : Mr. Kangni R Kpodar |
| Publisher | : International Monetary Fund |
| Total Pages | : 34 |
| Release | : 2021-11-12 |
| Genre | : Business & Economics |
| ISBN | : 1616356154 |
Download The Distributional Implications of the Impact of Fuel Price Increases on Inflation Book in PDF, Epub and Kindle
This paper investigates the response of consumer price inflation to changes in domestic fuel prices, looking at the different categories of the overall consumer price index (CPI). We then combine household survey data with the CPI components to construct a CPI index for the poorest and richest income quintiles with the view to assess the distributional impact of the pass-through. To undertake this analysis, the paper provides an update to the Global Monthly Retail Fuel Price Database, expanding the product coverage to premium and regular fuels, the time dimension to December 2020, and the sample to 190 countries. Three key findings stand out. First, the response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies than in advanced economies. Second, we show that past studies using crude oil prices instead of retail fuel prices to estimate the pass-through to inflation significantly underestimate it. Third, while the purchasing power of all households declines as fuel prices increase, the distributional impact is progressive. But the progressivity phases out within 6 months after the shock in advanced economies, whereas it persists beyond a year in developing countries.
| Author | : Kangni Kpodar |
| Publisher | : International Monetary Fund |
| Total Pages | : 38 |
| Release | : 2006-03 |
| Genre | : Business & Economics |
| ISBN | : |
Download Distributional Effects of Oil Price Changes on Household Expenditures: Evidence from Mali Book in PDF, Epub and Kindle
Using an input-output approach, this paper assesses the distributional effects of a rise in various petroleum product prices in Mali. The results show that, although rising gasoline and diesel prices affect mainly nonpoor households, rising kerosene prices are most harmful to the poor. Overall, the impact of fuel prices on household budgets displays a U-shaped relationship with expenditure per capita. Regardless of the oil product considered, highincome households would benefit disproportionately from oil price subsidies. This suggests that a petroleum price subsidy is an ineffective mechanism for protecting the income of poor households compared with a targeted subsidy.
| Author | : Ms.Stefania Fabrizio |
| Publisher | : International Monetary Fund |
| Total Pages | : 16 |
| Release | : 2016-10-27 |
| Genre | : Business & Economics |
| ISBN | : 1475550316 |
Download A New Tool for Distributional Incidence Analysis Book in PDF, Epub and Kindle
Increased focus on income inequality and distributional issues has made incidence analysis a crucial input into policy decisions. This note presents the theoretical framework used to conduct incidence analysis of fuel price subsidy reform and presents a user-friendly tool for its application. This new tool requires limited inputs and has the advantage of using the commonly available software program Excel. The note presents an illustration based on the case of Brazil, using the 2005 household survey and input-output table. The results reinforce the typical finding that fuel subsidies benefit well-off households and that their removal would be progressive.
| Author | : Kangni Kpodar |
| Publisher | : |
| Total Pages | : |
| Release | : 2010 |
| Genre | : Electronic book |
| ISBN | : |
Download Distributional Effects of Oil Price Changes on Household Income Book in PDF, Epub and Kindle
| Author | : Silvia Tiezzi |
| Publisher | : |
| Total Pages | : 35 |
| Release | : 2017 |
| Genre | : |
| ISBN | : |
Download The Signaling Effect of Gasoline Taxes and Its Distributional Implications Book in PDF, Epub and Kindle
This paper proposes and tests a better defined interpretation of the different responses of gasoline demand to tax changes and to market-related price changes. Namely, the signaling effect of gasoline taxes is one that impacts on long-run consumer decisions in addition to the incentives provided by tax-inclusive gasoline prices. Our hypothesis is tested using a complete demand system augmented with information on gasoline taxes and fitted to household-level data from the 2006 to 2013 rounds of the US Consumer Expenditure survey. Information on gasoline taxes is found to be a significant determinant of household demand additional to tax-inclusive gasoline prices. The equity implications are examined by contrasting the incidence across income distribution of a simulated $0.22/gallon tax increase to that of a market-related price increase equal in size. The tax increase is clearly regressive, slightly more than the market-related price increase. However, regressivity is by no means a reason to give up gasoline taxes as an instrument for reducing gasoline consumption externalities. Their high effectiveness in reducing gasoline demand implies that small tax increases can substantially improve the environment while minimizing the related distributional effects. Also, gasoline taxes generate revenue that can be used to offset their regressivity.
| Author | : Mr.David Coady |
| Publisher | : International Monetary Fund |
| Total Pages | : 23 |
| Release | : 2013-02-05 |
| Genre | : Business & Economics |
| ISBN | : 1475571194 |
Download Automatic Fuel Pricing Mechanisms with Price Smoothing Book in PDF, Epub and Kindle
Many developing and emerging countries do not fully pass-through increases in international fuel prices to domestic retail prices, with adverse consequences for fuel tax revenues and tax volatility. The adoption of an automatic fuel pricing mechanism can help to address this problem, and the incorporation of a price smoothing mechanism can ensure pass-through over the medium term but also avoid sharp increases (and decreases) in domestic prices. This technical note addresses the following issues: (i) the design of an automatic fuel pricing mechanism; (ii) the incorporation of domestic price smoothing and resulting tradeoffs; (iii) the transition from ad hoc pricing adjustments to an automatic mechanism; and (iv) policies to support this transition and the maintenance of an automatic mechanism. A standardized template for simulating and evaluating the implications of alternative pricing mechanisms for price and fiscal volatility is available on request.
| Author | : Baoping Shang |
| Publisher | : International Monetary Fund |
| Total Pages | : 32 |
| Release | : 2021-06-25 |
| Genre | : Business & Economics |
| ISBN | : 151357339X |
Download The Poverty and Distributional Impacts of Carbon Pricing: Channels and Policy Implications Book in PDF, Epub and Kindle
Addressing the poverty and distributional impacts of carbon pricing reforms is critical for the success of ambitious actions in the fight against climate change. This paper uses a simple framework to systematically review the channels through which carbon pricing can potentially affect poverty and inequality. It finds that the channels differ in important ways along several dimensions. The paper also identifies several key gaps in the current literature and discusses some considerations on how policy designs could take into account the attributes of the channels in mitigating the impacts of carbon pricing reforms on households.
| Author | : Udo Kock |
| Publisher | : International Monetary Fund |
| Total Pages | : 27 |
| Release | : 2010-07-01 |
| Genre | : Business & Economics |
| ISBN | : 1455287776 |
Download Inflation and Conflict in Iraq Book in PDF, Epub and Kindle
Containing inflation has turned out to be one of the most challenging aspects of economic management in Iraq. This paper posits that conventional as well as unconventional factors explain inflation dynamics in the recent past. We build a theoretical model based on the insights into the workings of socialist economies under supply shortages provided by Shleifer and Vishny (1992) to help explain price dynamics. In the model, strategic behavior of the fuel distribution monopolist results in fuel shortages, with implications for fuel and non-fuel inflation. A number of step-wise adjustments of administered prices for fuel products since December 2005 offer an interesting experiment to help study this behavior. Our findings show that inflation may have been influenced by shortages in fuel and non-fuel commodity supplies, which themselves are driven by violence and rent-seeking.
| Author | : Mr.Chadi Abdallah |
| Publisher | : International Monetary Fund |
| Total Pages | : 31 |
| Release | : 2020-06-12 |
| Genre | : Business & Economics |
| ISBN | : 1513546090 |
Download How Large and Persistent is the Response of Inflation to Changes in Retail Energy Prices? Book in PDF, Epub and Kindle
We estimate the dynamic effects of changes in retail energy prices on inflation using a novel monthly database, covering 110 countries over 2000:M1 to 2016:M6. We find that (i) inflation responds positively to retail energy price shocks, with effects being, on average, modest and transitory. However, our results suggest significant heterogeneity in the response of inflation to these shocks owing to differences in factors related to labor market flexibility, energy intensity, and monetary policy credibility. We also find compelling evidence of asymmetric effects—under sufficiently large shocks—in the case of high-income and low-income countries, with increases in retail fuel prices inducing larger effects on inflation than decreases in fuel prices.
| Author | : Daniel Leigh |
| Publisher | : International Monetary Fund |
| Total Pages | : 22 |
| Release | : 2006-10 |
| Genre | : Business & Economics |
| ISBN | : |
Download Fuel Price Subsidies in Gabon Book in PDF, Epub and Kindle
This paper looks at the fiscal cost and distributional impact of implicit fuel price subsidies in Gabon, where fuel prices have remained largely unchanged since 2002. Using estimated implicit import parity prices, we evaluate the total fiscal cost of the subsidies at 3.2 percent of non-oil GDP in 2005-more than total public health expenditures. We also analyze the distribution of the subsidies using household survey data and find that the bulk of the subsidies benefit higher-income households. Finally, we suggest use of a number of existing programs to provide a more targeted and cost-effective means of protecting the real incomes of lower-income households from the effects of energy price increases.
