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Dynamic Fuel Price Pass-Through: Evidence from a New Global Retail Fuel Price Database
Author: Mr. Kangni R Kpodar and Mr. Chadi Abdallah
Series:
IMF Working Papers
Volume/Issue:
Volume 2016: Issue 254
Language:
English
Publication Date:
23 Dec 2016
DOI:
https://doi.org/10.5089/9781475563221.001
ISBN:
9781475563221
ISSN:
1018-5941
Pages:
32
Keywords:
WP; price; fuel price; oil price; Retail fuel prices; fuel subsidies; pass-through; price shock; fiscal cost; pass-through coefficient; price gap; price change; fuel price pass-through; fuel price shock; retail fuel price; fuel price database; transportation cost; price differential; price difference; Fuel prices; Oil prices; Energy subsidies; Inflation; Gasoline; Sub-Saharan Africa; Europe; Asia and Pacific; North Africa; Middle East
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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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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.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund