Pass-through of Temporary Fuel Tax Reductions: Evidence from Europe

Chiara Drolsbach, Maximilian Maurice Gail and Phil-Adrian Klotz ()
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Chiara Drolsbach: Justus Liebig University Giessen
Maximilian Maurice Gail: Justus Liebig University Giessen
Phil-Adrian Klotz: Justus Liebig University Giessen

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: Several European countries have implemented temporarily fuel tax reductions in 2022 to relieve the financial burden on their citizens. This paper provides estimates of the pass-through rates as well as the effect on retail margins for France, Germany and Italy. Using a unique data set containing daily consumer prices for gasoline and diesel, we employ a staggered Difference-in-Differences (DiD) design. Our results show a heterogeneous pass-through of the fuel tax reductions depending on the country and on the type of fuel. Nevertheless, we find a full- or even over-shifting of the tax cuts in all three countries. These findings also have important implications for the effective design of unconventional fiscal policy as well as for competition policy in the fuel market.

Keywords: Fuel Prices; Pass-through; Environmental taxes; Staggered DiD (search for similar items in EconPapers)
JEL-codes: H23 L13 L91 Q48 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2022
New Economics Papers: this item is included in nep-eec, nep-ene and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:202239

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