The Distributional Implications of the Impact of Fuel Price Increases on Inflation
The Distributional Implications of the Impact of Fuel Price Increases on Inflation

Author: Mr. Kangni R Kpodar

Publisher: International Monetary Fund

Published: 2021-11-12

Total Pages: 34

ISBN-13: 1616356154

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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.

Global Implications of Lower Oil Prices
Global Implications of Lower Oil Prices

Author: Mr.Aasim M. Husain

Publisher: International Monetary Fund

Published: 2015-07-14

Total Pages: 41

ISBN-13: 151357227X

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The sharp drop in oil prices is one of the most important global economic developments over the past year. The SDN finds that (i) supply factors have played a somewhat larger role than demand factors in driving the oil price drop, (ii) a substantial part of the price decline is expected to persist into the medium term, although there is large uncertainty, (iii) lower oil prices will support global growth, (iv) the sharp oil price drop could still trigger financial strains, and (v) policy responses should depend on the terms-of-trade impact, fiscal and external vulnerabilities, and domestic cyclical position.

Issues in Domestic Petroleum Pricing in Oil-Producing Countries
Issues in Domestic Petroleum Pricing in Oil-Producing Countries

Author: Benedict J. Clements

Publisher: INTERNATIONAL MONETARY FUND

Published: 2002-08-01

Total Pages: 31

ISBN-13: 9781451856132

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This paper discusses issues relating to the domestic pricing of petroleum in oil-producing countries. It finds that in most major oil-exporting countries, government policies keep domestic prices below free-market levels, resulting in implicit subsidies that equaled 3.0 percent of GDP, on average, in 1999. Moreover, the paper argues, these petroleum subsidies are inefficient and inequitable-entailing substantial opportunity costs in terms of forgone revenue or productive spending-and also procyclical, complicating macroeconomic management. Nonetheless, the elimination of petroleum subsidies is often politically difficult, although countervailing measures and publicity campaigns can help engender support for reform.

Taxation of Petroleum Products
Taxation of Petroleum Products

Author: Mrs.Poonam Gupta

Publisher: International Monetary Fund

Published: 1994-03-01

Total Pages: 58

ISBN-13: 1451979754

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The domestic taxation of petroleum products is an important source of revenue in most countries. However, there is a wide variation of tax rates on petroleum products across countries, which cannot be explained by economic theory alone. This paper surveys different considerations advanced for taxing petroleum and presents petroleum tax rate data in 120 countries. It concludes that a significant reduction in the present extremely wide variation in petroleum prices and tax rates appears warranted.

Automatic Fuel Pricing Mechanisms with Price Smoothing
Automatic Fuel Pricing Mechanisms with Price Smoothing

Author: Mr.David Coady

Publisher: International Monetary Fund

Published: 2013-02-05

Total Pages: 23

ISBN-13: 1475571194

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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.

Subsidy Reform in the Middle East and North Africa
Subsidy Reform in the Middle East and North Africa

Author: Mr.Carlo A Sdralevich

Publisher: International Monetary Fund

Published: 2014-07-09

Total Pages: 130

ISBN-13: 1498350437

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In the Middle East and North Africa (MENA) countries price subsidies are common, especially on food and fuels. However, these are neither well targeted nor cost effective as a social protection tool, often benefiting mainly the better off instead of the poor and vulnerable. This paper explores the challenges of replacing generalized price subsidies with more equitable social safety net instruments, including the short-term inflationary effects, and describes the features of successful subsidy reforms.

States in the Developing World
States in the Developing World

Author: Miguel A. Centeno

Publisher: Cambridge University Press

Published: 2017-02-27

Total Pages: 493

ISBN-13: 1107158494

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An exploration of how states address the often conflicting challenges of development, order, and inclusion.

Local Content Policies in the Oil and Gas Sector
Local Content Policies in the Oil and Gas Sector

Author: Silvana Tordo

Publisher: World Bank Publications

Published: 2013-07-22

Total Pages: 197

ISBN-13: 0821399349

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A number of countries have recently discovered and are developing oil and gas reserves. Policy makers in such countries are anxious to obtain the greatest benefits for their economies from the extraction of these exhaustible resources by designing appropriate policies to achieve desired goals. One important theme of such policies is the so-called local content created by the sector—the extent to which the output of the extractive industry sector generates further benefits to the economy beyond the direct contribution of its value-added, through its links to other sectors. While local content policies have the potential to stimulate broad-based economic development, their application in petroleum-rich countries has achieved mixed results. This paper describes the policies and practices meant to foster the development of economic linkages from the petroleum sector, as adopted by a number of petroleum-producing countries both in and outside the Organisation for Economic Co-operation and Development. Examples of policy objectives, implementation tools, and reporting metrics are provided to derive lessons of wider applicability. The paper presents various conclusions for policy makers about the design of local content policies.

The Prize
The Prize

Author: Daniel Yergin

Publisher: Simon and Schuster

Published: 2012-09-11

Total Pages: 1094

ISBN-13: 1471104753

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The Prize recounts the panoramic history of oil -- and the struggle for wealth power that has always surrounded oil. This struggle has shaken the world economy, dictated the outcome of wars, and transformed the destiny of men and nations. The Prize is as much a history of the twentieth century as of the oil industry itself. The canvas of this history is enormous -- from the drilling of the first well in Pennsylvania through two great world wars to the Iraqi invasion of Kuwait and Operation Desert Storm. The cast extends from wildcatters and rogues to oil tycoons, and from Winston Churchill and Ibn Saud to George Bush and Saddam Hussein. The definitive work on the subject of oil and a major contribution to understanding our century, The Prize is a book of extraordinary breadth, riveting excitement -- and great importance.

International Dimensions of Monetary Policy
International Dimensions of Monetary Policy

Author: Jordi Galí

Publisher: University of Chicago Press

Published: 2010-03-15

Total Pages: 663

ISBN-13: 0226278875

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United States monetary policy has traditionally been modeled under the assumption that the domestic economy is immune to international factors and exogenous shocks. Such an assumption is increasingly unrealistic in the age of integrated capital markets, tightened links between national economies, and reduced trading costs. International Dimensions of Monetary Policy brings together fresh research to address the repercussions of the continuing evolution toward globalization for the conduct of monetary policy. In this comprehensive book, the authors examine the real and potential effects of increased openness and exposure to international economic dynamics from a variety of perspectives. Their findings reveal that central banks continue to influence decisively domestic economic outcomes—even inflation—suggesting that international factors may have a limited role in national performance. International Dimensions of Monetary Policy will lead the way in analyzing monetary policy measures in complex economies.