Seminars

Lionel Wilner (CREST-ENSAE)

Tuesday , September 24th 2024

Lionel Wilner (CREST-ENSAE) will present “Compensating against fuel inflation: Price subsidies or transfers?”, joint with Odran Bonnet (Insee), Etienne Fize (IPP, PSE) and Tristan Loisel (CREST).

 

Abstract:

Compensating agents against substantial and unexpected shocks requires both targeting tax policies and taking behavioral responses into account. Based on transaction-level data from France, this article exploits quasi-experimental variation provided by 2022 fuel inflation and excise tax cuts. After disentangling anticipation from price effects, we estimate a price elasticity of fuel demand of -0.31, on average, which varies little with respect to income and location but substantially decreases with fuel spending, in absolute value. Using targeted transfers only achieves imperfect compensation, yet a budget-constrained policy-maker seeking to alleviate excessive losses relative to income prefers income-based transfers to price subsidies.

Modification date: 19 September 2024 | Publication date: 19 September 2024 | By: Régis Grateau