Oil Spill(over)s: Linkages in Petroleum Product Pricing Policies in West African Countries

32 Pages Posted: 20 May 2011

See all articles by Antonio C. David

Antonio C. David

World Bank - Policy Research Department; International Monetary Fund (IMF)

Marshall Mills

International Monetary Fund (IMF)

Mohamed El Harrak

affiliation not provided to SSRN

Lorraine Ocampos

affiliation not provided to SSRN

Date Written: May 2011

Abstract

This paper addresses a number of issues regarding petroleum product pricing in Western Africa emphasizing international spillovers. We use panel unit root rests and long-run modeling based on vector error correction models to assess links and convergence in petroleum product prices across countries. Our results indicate that in general over the long-run there is convergence in prices across the countries. The estimation results for gasoline and diesel prices suggest the presence of long-run links between retail prices among the different country groupings with long-run multipliers ranging from 11 to -6.66. The speed of Adjustment to equilibrium varies significantly according to the country groupings considered. In contrast, the econometric results for kerosene prices not only indicate a weaker link between prices across countries, but also a much slower adjustment to equilibrium. In light of these important spillovers, the need to better coordinate pricing s and tax policies towards petroleum products at the regional level becomes apparent.

Suggested Citation

David, Antonio C. and Mills, Marshall and El Harrak, Mohamed and Ocampos, Lorraine, Oil Spill(over)s: Linkages in Petroleum Product Pricing Policies in West African Countries (May 2011). Available at SSRN: https://ssrn.com/abstract=1847335 or http://dx.doi.org/10.2139/ssrn.1847335

Antonio C. David

World Bank - Policy Research Department ( email )

1818 H Street
Washington, DC 20433
United States

International Monetary Fund (IMF) ( email )

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

Marshall Mills (Contact Author)

International Monetary Fund (IMF) ( email )

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

Mohamed El Harrak

affiliation not provided to SSRN

No Address Available

Lorraine Ocampos

affiliation not provided to SSRN

No Address Available

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