Economic Determinants of Government Subsidies

Benedict Clements, Hugo Rodríguez and Gerd Schwartz

No 1998/166, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; government; subsidy equation; government subsidies; government expenditures; optimization problem; interest expenditures; subsidization policy; subsidy expenditure; non-resident government unit; government subsidy expenditure; government intervention; government subsidization policy; government transfer; government assistance; government interest expenditures; Total expenditures; Logit models (search for similar items in EconPapers)
Pages: 32
Date: 1998-12-01
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1998/166

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