Export Competitiveness - Fuel Price Nexus in Developing Countries: Real or False Concern?

By Kangni R Kpodar, Stefania Fabrizio, Kodjovi M. Eklou

February 4, 2019

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Format: Chicago

Kangni R Kpodar, Stefania Fabrizio, and Kodjovi M. Eklou Export Competitiveness - Fuel Price Nexus in Developing Countries: Real or False Concern?, (USA: International Monetary Fund, 2019) accessed December 22, 2024

Disclaimer: 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.

Summary

This paper investigates the impact of domestic fuel price increases on export growth in a sample of 77 developing countries over the period 2000-2014. Using a fixed-effect estimator and the local projection approach, we find that an increase in domestic gasoline or diesel price adversely affects real non-fuel export growth, but only in the short run as the impact phases out within two years after the shock. The results also suggest that the negative effect of fuel price increase on exports is mainly noticeable in countries with a high-energy dependency ratio and countries where access to an alternative source of energy, such as electricity, is constrained, thus preventing producers from altering energy consumption mix in response to fuel price changes.

Subject: Energy prices, Export performance, Fuel prices, Inflation, International trade, National accounts, Prices, Real exports

Keywords: Cross price elasticity, Developing countries, Diesel pump price, Energy price shock, Energy prices, Europe, Export growth, Export performance, Fuel price hike, Fuel price increase, Fuel prices, Fuel Subsidies, Gasoline pump price, Inflation, Input cost, Price change, Price shock, Pump price, Real exports, Retail fuel prices, Stabilization fund, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/025
Stock No:

WPIEA2019025
ISBN:

9781484387771
ISSN:

1018-5941

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