Energy Subsidies, Public Investment and Endogenous Growth
We consider impacts of fossil fuel subsidy reforms on economic growth, focusing mostly on the Middle East and North Africa (MENA) countries. The main empirical result is that a country that initially subsidizes its fossil fuels, and then eliminates or reduces these subsidies, will as a result experi...
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2018
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| Online Access: | http://hdl.handle.net/10986/29236 |
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okr-10986-292362021-05-25T10:54:43Z Energy Subsidies, Public Investment and Endogenous Growth Mundaca, Gabriela ENERGY SUBSIDIES ECONOMIC GROWTH PUBLIC INVESTMENT TAXATION PUBLIC SPENDING We consider impacts of fossil fuel subsidy reforms on economic growth, focusing mostly on the Middle East and North Africa (MENA) countries. The main empirical result is that a country that initially subsidizes its fossil fuels, and then eliminates or reduces these subsidies, will as a result experience higher economic GDP per capita growth, and higher levels of employment and labor force participation, especially among the young. These effects are strongest in countries whose fuel subsidies are high at the outset, such as in the MENA region. Our model predicts that a 20 US$ cents average increase in the gasoline and diesel prices per liter, through removal of subsidies, increase the GDP per capita growth rate by about 0.48% and 0.30%, respectively. In the MENA countries, governments’ savings from reduced subsidies seem to be earmarked mainly to health expenditures, education expenditures and public investment in infrastructure. These channels appear to be strong contributing factors to higher long-run growth when fuel subsidies are reduced. 2018-01-26T16:03:40Z 2018-01-26T16:03:40Z 2017-11 Journal Article Energy Policy 0301-4215 http://hdl.handle.net/10986/29236 CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Elsevier Publications & Research :: Journal Article Publications & Research Middle East and North Africa Middle East North Africa |
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Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| topic |
ENERGY SUBSIDIES ECONOMIC GROWTH PUBLIC INVESTMENT TAXATION PUBLIC SPENDING |
| spellingShingle |
ENERGY SUBSIDIES ECONOMIC GROWTH PUBLIC INVESTMENT TAXATION PUBLIC SPENDING Mundaca, Gabriela Energy Subsidies, Public Investment and Endogenous Growth |
| geographic_facet |
Middle East and North Africa Middle East North Africa |
| description |
We consider impacts of fossil fuel subsidy reforms on economic growth, focusing mostly on the Middle East and North Africa (MENA) countries. The main empirical result is that a country that initially subsidizes its fossil fuels, and then eliminates or reduces these subsidies, will as a result experience higher economic GDP per capita growth, and higher levels of employment and labor force participation, especially among the young. These effects are strongest in countries whose fuel subsidies are high at the outset, such as in the MENA region. Our model predicts that a 20 US$ cents average increase in the gasoline and diesel prices per liter, through removal of subsidies, increase the GDP per capita growth rate by about 0.48% and 0.30%, respectively. In the MENA countries, governments’ savings from reduced subsidies seem to be earmarked mainly to health expenditures, education expenditures and public investment in infrastructure. These channels appear to be strong contributing factors to higher long-run growth when fuel subsidies are reduced. |
| format |
Journal Article |
| author |
Mundaca, Gabriela |
| author_facet |
Mundaca, Gabriela |
| author_sort |
Mundaca, Gabriela |
| title |
Energy Subsidies, Public Investment and Endogenous Growth |
| title_short |
Energy Subsidies, Public Investment and Endogenous Growth |
| title_full |
Energy Subsidies, Public Investment and Endogenous Growth |
| title_fullStr |
Energy Subsidies, Public Investment and Endogenous Growth |
| title_full_unstemmed |
Energy Subsidies, Public Investment and Endogenous Growth |
| title_sort |
energy subsidies, public investment and endogenous growth |
| publisher |
Elsevier |
| publishDate |
2018 |
| url |
http://hdl.handle.net/10986/29236 |
| _version_ |
1764468836034150400 |