The short-term effects of gasoline price subsidy removal in Nigeria: an analysis of the economic and social Impacts

Emmanuel Dele Balogun

MPRA Paper from University Library of Munich, Germany

Abstract: This study examines the immediate consequences of gasoline subsidy removal in Nigeria, focusing on economic and social outcomes. Utilizing monthly data from the 2000 to 2024 subsidy removals, the study analyzes inflation trends, transportation costs, public sentiment, and fiscal adjustments. It also estimated via econometrics model, the short-term partial effects of gasoline price subsidy removal on transportation costs and aggregate consumer prices. Findings reveal significant inflationary pressures, social unrest, and disproportionate impacts on low-income households, alongside modest fiscal gains. The study underscores the need for compensatory measures to mitigate short-term shocks. The conclusion is that the removal of gasoline subsidies in Nigeria is a double-edged sword with significant short-term implications. While it offers potential benefits such as reduced fiscal burden, improved government finances, and long-term economic reforms, it also poses immediate challenges, including increased inflation, higher transportation costs, and potential social unrest. The success of this policy will depend on the government’s ability to manage the transition effectively, implement complementary measures to cushion the impact on the populace, and ensure that the long-term benefits outweigh the short-term pains

Keywords: Macroeconomics; Monetary policy analysis (search for similar items in EconPapers)
JEL-codes: E3 (search for similar items in EconPapers)
Date: 2025-02-10
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:123659

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