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The Political Economy of Fuel Subsidies: Results From Two World Bank Projects

The Political Economy of Fuel Subsidies:
Results From Two World Bank Projects

Presenters:
Cees Van Beers
University of Delft, Netherlands
and
Christos Kotsogiannis
University of Exeter, UK
 
Venue: MC2-850
 
Thursday, June 23, 12.30-2 pm

Abstract:
This presentation will focus on empirical explanations of international fuel pricing, focusing on gasoline, diesel and kerosene prices, with emphasis on both political and economic explanations. The analysis builds on a large data set, collected and set up as part of two World Bank projects, based on fuel prices, collected for about 170 countries going back to 1991, by the German Development Agency (GTZ) and by the IMF. These data have been merged with other data sets including those for a wide range of political, governance, and economic variables. This presentations in this seminar report on some preliminary results from the two projects. The main objective is to explain differences and changes in fuel pricing and degrees of subsidy and tax, by country and over time. A number of interesting results emerge, which are however preliminary since this analysis of these data is at an early phase. One result is that a more multi-layered government appears to lead to higher prices and thus less fuel subsidy (or more taxation). Other preliminary results are that when governments display less electoral competition for choosing either the legislative or the executive body, or there is a presidential instead of a parliamentary system, fuels are subsidized by more (taxed by less). This analysis could provide clues to mechanisms behind fuel price setting, which might, conceivably, indicate constructive strategies to reform these.

Bio:
Cees Van Beers is professor of economics at the Delft University of Technology, in Delft, the Netherlands. He holds a Ph D degree in economics from the Free University of Amsterdam. He has worked and published extensively on topics related to energy pricing and subsidies, and is co-author, with Andre de Moor, of an influential book on this topic.

Bio:
Christos Kotsogiannis is professor of economics at the University of Exeter Business School, in Exeter, UK. A Greek national, he holds a Ph D degree from the University of Essex, UK. His main field of research is public economics, where he has published widely, and has made several seminal contributions to the economic understanding of fiscal federalism. Recently, he has worked on a project with IMF staff, to build the analytical underpinnings of border tax adjustment as a potential climate policy instrument.

For further information on the presentation, contact Jon Strand at: jstrand1@worldbank.org, 202-458-5122

The Joint Bank-Fund Brown-Bag Research Seminars on Environment and Energy is a joint initiative between the Development Research Group, Environment and Energy Team (DECEE), World Bank, and the Fiscal Affairs Department, IMF. Organizers of the series are Jon Strand (DECEE), and Ruud de Mooij and Ian Parry (FAD/IMF). The seminars are held at lunch time, typically once every two weeks, and alternately in the Bank and Fund. Aims of the seminars are to raise attention to, and interest, in environment, energy and natural resources issues in both institutions; to promote the interaction between the two institutions in these fields; and to improve the institutions' common work on policy




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