 Fossil Fuel Subsidy Reform in the Developing World: Who Wins, Who Loses, and Why?Ian Coxhead and Corbett Grainger Asian Development Review, 2018, vol. 35, issue 2, 180-203 Abstract: Fossil fuel subsidies are widespread in developing countries, where reform efforts are often derailed by disputes over the likely distribution of gains and losses. The impacts of subsidy reform are transmitted to households through changes in energy prices and prices of other goods and services, as well as through factor earnings. Most empirical studies focus on consumer expenditures alone, and computable general equilibrium analyses typically report only total effects without decomposing them by source. Meanwhile, analytical models neglect important open-economy characteristics relevant to developing countries. In this paper, we develop an analytical model of a small open economy with a preexisting fossil fuel subsidy and identify direct and indirect impacts of subsidy reform on real household incomes. Our results, illustrated with data from Viet Nam, highlight two important drivers of distributional change: (i) the mix of tradable and nontradable goods, reflecting the structure of a trade-dependent economy; and (ii) household heterogeneity in sources of factor income. Keywords: distribution; energy subsidy; household income; labor; real exchange rate; trade (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:tpr:adbadr:v:35:y:2018:i:2:p:180-203 Access Statistics for this article Asian Development Review is currently edited by Yasuyuki Sawada and Naoyuki Yoshino More articles in Asian Development Review from MIT Press |
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