Dynamic Fuel Price Pass Through

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Dynamic Fuel Price Pass Through

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Author : Mr.Kangni R Kpodar
language : en
Publisher: International Monetary Fund
Release Date : 2017-01-18

Dynamic Fuel Price Pass Through written by Mr.Kangni R Kpodar and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-01-18 with Business & Economics categories.

This paper assesses the dynamic pass-through of crude oil price shocks to retail fuel prices using a novel database on monthly retail fuel prices for 162 countries. The impulse response functions suggest that on average, a one cent increase in crude oil prices per liter translates into a 1.2 cent increase in the retail gasoline price at peak level six months after the shock. However, the estimates vary significantly across country groups, ranging from about 0.5 cent in MENA countries to two cents in advanced economies. The results also show that positive oil price shocks have a larger impact than negative price shocks on the retail gasoline price. Finally, the paper underscores the importance of the new dataset in refining estimates of the fiscal cost of incomplete pass-through.

Automatic Fuel Pricing Mechanisms With Price Smoothing

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Author : Mr.David Coady
language : en
Publisher: International Monetary Fund
Release Date : 2013-01-24

Automatic Fuel Pricing Mechanisms With Price Smoothing written by Mr.David Coady and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-01-24 with Business & Economics categories.

Many developing and emerging countries do not fully pass-through increases in international fuel prices to domestic retail prices, with adverse consequences for fuel tax revenues and tax volatility. The adoption of an automatic fuel pricing mechanism can help to address this problem, and the incorporation of a price smoothing mechanism can ensure pass-through over the medium term but also avoid sharp increases (and decreases) in domestic prices. This technical note addresses the following issues: (i) the design of an automatic fuel pricing mechanism; (ii) the incorporation of domestic price smoothing and resulting tradeoffs; (iii) the transition from ad hoc pricing adjustments to an automatic mechanism; and (iv) policies to support this transition and the maintenance of an automatic mechanism. A standardized template for simulating and evaluating the implications of alternative pricing mechanisms for price and fiscal volatility is available on request.

To Pass Or Not To Pass Through International Fuel Price Changes To Domestic Fuel Prices In Developing Countries What Are The Drivers

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Author : Kangni R. Kpodar
language : en
Publisher:
Release Date : 2020-09-25

To Pass Or Not To Pass Through International Fuel Price Changes To Domestic Fuel Prices In Developing Countries What Are The Drivers written by Kangni R. Kpodar and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-09-25 with categories.

While many developing countries limit the international fuel price pass through to domestic fuel prices, others do not. Against this backdrop, we examine the factors that determine whether governments allow international fuel price changes to be passed through to domestic prices in developing countries using a dataset spanning 109 developing countries from 2000 to 2014. The paper finds that the pass-through is higher when changes in international prices are moderate and less volatile. In addition, the flexibility of the pricing mechanism allows for higher pass-through while exchange rate depreciation and lower retail fuel prices in neighboring countries inhibit it. The econometric results also underscore the fact that countries with inflation tend to experience lower pass-through, whereas those with high public debt exhibit larger pass-through. Finally, no evidence is found that political variables or environmental policies matter with regard to fuel price dynamics in the short-term. These findings, which are consistent across fuel products (gasoline, diesel and kerosene), allow us to draw important policy lessons for fuel subsidy reforms.

The Distributional Implications Of The Impact Of Fuel Price Increases On Inflation

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Author : Mr. Kangni R Kpodar
language : en
Publisher: International Monetary Fund
Release Date : 2021-11-12

The Distributional Implications Of The Impact Of Fuel Price Increases On Inflation written by Mr. Kangni R Kpodar and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-11-12 with Business & Economics categories.

This paper investigates the response of consumer price inflation to changes in domestic fuel prices, looking at the different categories of the overall consumer price index (CPI). We then combine household survey data with the CPI components to construct a CPI index for the poorest and richest income quintiles with the view to assess the distributional impact of the pass-through. To undertake this analysis, the paper provides an update to the Global Monthly Retail Fuel Price Database, expanding the product coverage to premium and regular fuels, the time dimension to December 2020, and the sample to 190 countries. Three key findings stand out. First, the response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies than in advanced economies. Second, we show that past studies using crude oil prices instead of retail fuel prices to estimate the pass-through to inflation significantly underestimate it. Third, while the purchasing power of all households declines as fuel prices increase, the distributional impact is progressive. But the progressivity phases out within 6 months after the shock in advanced economies, whereas it persists beyond a year in developing countries.

Greenflation Or Greensulation The Case Of Fuel Excise Taxes And Oil Price Pass Through

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Author : Mr. JaeBin Ahn
language : en
Publisher: International Monetary Fund
Release Date : 2024-07-12

Greenflation Or Greensulation The Case Of Fuel Excise Taxes And Oil Price Pass Through written by Mr. JaeBin Ahn and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-07-12 with categories.

Can a carbon tax reduce inflation volatility? Focusing on fuel excise taxes, this paper provides systematic evidence on their role as a shock absorber that helps mitigating the impact of global oil price shocks on domestic inflation. Exploiting substantial variation in fuel tax rates across 28 OECD countries over the period from 2014 to 2021, a simple idea that a per-unit, specific tax takes up a portion of the product price immune to cost shocks goes a long way toward explaining heterogeneity in the degree of oil price pass-through into domestic inflation across countries. A back-of-the-envelope calculation from the estimation results supports its quantitative significance---differences in fuel tax rates could explain about 30% of the variation in annual headline CPI inflation rates observed between the U.S. and U.K. during the 2021 inflation surge.

Time Lags In The Pass Through Of Crude Oil Prices Big Data Evidence From The German Gasoline Market

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Author : Manuel Frondel
language : en
Publisher:
Release Date : 2015

Time Lags In The Pass Through Of Crude Oil Prices Big Data Evidence From The German Gasoline Market written by Manuel Frondel and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.

Gasoline Price Changes The Dynamic Of Supply Demand And Competition

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Author :
language : en
Publisher: DIANE Publishing
Release Date : 2005

Gasoline Price Changes The Dynamic Of Supply Demand And Competition written by and has been published by DIANE Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Gasoline categories.

Export Competitiveness Fuel Price Nexus In Developing Countries Real Or False Concern

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Author : Mr.Kangni R Kpodar
language : en
Publisher: International Monetary Fund
Release Date : 2019-02-04

Export Competitiveness Fuel Price Nexus In Developing Countries Real Or False Concern written by Mr.Kangni R Kpodar and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-02-04 with Business & Economics categories.

This paper investigates the impact of domestic fuel price increases on export growth in a sample of 77 developing countries over the period 2000-2014. Using a fixed-effect estimator and the local projection approach, we find that an increase in domestic gasoline or diesel price adversely affects real non-fuel export growth, but only in the short run as the impact phases out within two years after the shock. The results also suggest that the negative effect of fuel price increase on exports is mainly noticeable in countries with a high-energy dependency ratio and countries where access to an alternative source of energy, such as electricity, is constrained, thus preventing producers from altering energy consumption mix in response to fuel price changes.

Estimating Retail Gasoline Price Dynamics

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Author : George Deltas
language : en
Publisher:
Release Date : 2018

Estimating Retail Gasoline Price Dynamics written by George Deltas and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.

The study shows that much of the variation in the findings of the literature on retail gasoline price dynamics is systematic rather than sample variation from using different data. Estimates of pass-through rates depend systematically on research design and features of the data, such as the sampling frequency, the choice of upstream price, whether taxes are included or not, the sample length, and the postulated lag structure. In addition, there are systematic differences between time periods and countries. Using a 20 year-long dataset of 28 European Union countries we quantify the extent of estimate variation that arises from the choice of data structure from that arising from temporal and country heterogeneity and sampling variation. We also show that country heterogeneity itself has systematic components, with wealthier countries experiencing slower adjustments. Our results inform the interpretation of results on pass-through rates derived from Error Correction Models. They are also of relevance for the broader literature estimating the transmission of price shocks in the economy.

Oil Prices And Inflation Dynamics Evidence From Advanced And Developing Economies

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Author : Sangyup Choi
language : en
Publisher: International Monetary Fund
Release Date : 2017-09-05

Oil Prices And Inflation Dynamics Evidence From Advanced And Developing Economies written by Sangyup Choi and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-09-05 with Business & Economics categories.

We study the impact of fluctuations in global oil prices on domestic inflation using an unbalanced panel of 72 advanced and developing economies over the period from 1970 to 2015. We find that a 10 percent increase in global oil inflation increases, on average, domestic inflation by about 0.4 percentage point on impact, with the effect vanishing after two years and being similar between advanced and developing economies. We also find that the effect is asymmetric, with positive oil price shocks having a larger effect than negative ones. The impact of oil price shocks, however, has declined over time due in large part to a better conduct of monetary policy. We further examine the transmission channels of oil price shocks on domestic inflation during the recent decades, by making use of a monthly dataset from 2000 to 2015. The results suggest that the share of transport in the CPI basket and energy subsidies are the most robust factors in explaining cross-country variations in the effects of oil price shocks during the this period.