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Economic Determinants of Government Subsidies
Author:
Mr. Benedict J. Clements
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Mr. Hugo Rodríguez null

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Mr. Gerd Schwartz
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Series:
IMF Working Papers
Volume/Issue:
Volume 1998: Issue 166
Language:
English
Publication Date:
01 Dec 1998
DOI:
https://doi.org/10.5089/9781451979664.001
ISBN:
9781451979664
ISSN:
1018-5941
Pages:
32
Keywords:
WP; government; subsidy equation; government subsidies; government expenditures; optimization problem; interest expenditures; subsidization policy; subsidy expenditure; non-resident government unit; government subsidy expenditure; government intervention; government subsidization policy; government transfer; government assistance; government interest expenditures; Total expenditures; Logit models
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The paper studies the economic determinants of government subsidies using panel data for 40 countries over 18 years (from 1975 to 1992) and finds that individual country-specific factors play a sizeable role in determining government subsidies. But it also suggests several characteristics—a small government, a small external current account deficit, and a productive structure geared more toward services and agriculture than manufacturing—may make it easier to keep subsidy expenditures down. The paper also suggests that globalization and the associated increase in openness are not impediments to reducing subsidies. In itself, an IMF-supported adjustment program is found not to be a significant determinant of government subsidy expenditures.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund