Abstract
AbstractAfter the sharp increase of oil prices experienced in recent years, in order to stabilize fuel prices, many countries experimented automatic fiscal mechanisms consisting of a one-to-one reduction in specific taxes matching the rise in input prices. This study investigates the impact of these mechanisms on wholesale gasoline and motor diesel prices. Our estimates highlight that fiscal sterilization brings about a rise in final wholesale prices that more than compensate reduction in taxes. Hence, these “flexible” taxation mechanisms could not be a proper policy for stabilizing price levels in fuel markets.KeywordsGross Domestic ProductFuel PriceGasoline PriceSeemingly Unrelated RegressionWholesale PrexThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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