The Distributional Effects of Oil Price Changes on Household Income: Evidence from Mali

Posted: 8 Mar 2010

See all articles by Kangni Kpodar

Kangni Kpodar

International Monetary Fund (IMF)

Calvin Djiofack

affiliation not provided to SSRN

Abstract

Many net oil-importing developing countries, particularly African economies, have faced economic difficulties with high oil price increases. As a case study, this paper assesses the distributional effects of a rise in various petroleum product prices in Mali using a standard computable general equilibrium model. The results suggest that rising diesel prices primarily affect richer households, while the poorest ones tend to suffer more from higher kerosene and gasoline prices. Overall, the impact of fuel prices on household budgets shows a U-shaped relationship with expenditure per capita. Regardless of the oil product considered, high-income households benefit disproportionately from oil price subsidies. This suggests that petroleum price subsidies are ineffective in protecting the income of poor households compared with a targeted subsidy.

JEL Classification: H20, D58, R20

Suggested Citation

Kpodar, Kangni and Djiofack, Calvin, The Distributional Effects of Oil Price Changes on Household Income: Evidence from Mali. Journal of African Economies, Vol. 19, No. 2, pp. 205-236, 2010, Available at SSRN: https://ssrn.com/abstract=1565284 or http://dx.doi.org/ejp023

Kangni Kpodar (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Calvin Djiofack

affiliation not provided to SSRN

No Address Available

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