Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/190191
Authors: 
Jara, H. Xavier
Lee, Po Chun
Montesdeoca, Lourdes
Varela, Marcelo
Year of Publication: 
2018
Series/Report no.: 
WIDER Working Paper 2018/144
Abstract: 
This paper aims to evaluate the progressivity of different fuel subsidies in Ecuador as well as the budgetary and distributional effects of a potential elimination of such subsidies. Our analysis makes use of ECUAMOD, the tax-benefit microsimulation model for Ecuador, together with representative household microdata from ENIGHUR 2011-12. Our results show that domestic gas subsidy tends to be progressive, whereas gasoline and diesel subsidies tend to be regressive. Our simulations show that eliminating all fuel subsidies would increase poverty and inequality due to the importance of domestic gas subsidy for low-income households. Eliminating only gasoline and diesel subsidies would not impact poverty and inequality, while allowing to reduce government expenditure. We further show that using part of the budget saved from the elimination of fuel subsidies to increase social assistance payments in Ecuador, could be a mechanism to compensate low-income families for their loss following fuel subsidy elimination.
Subjects: 
fuel subsidies
Ecuador
income distribution
microsimulation
JEL: 
D13
H24
I32
I38
ISBN: 
978-92-9256-586-2
Document Type: 
Working Paper
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