Does Subsidy Removal Hurt the Poor? Evidence from Computable General Equilibrium Analysis
"The study examines the effects of the removal of petroleum subsidies on poverty in Nigeria. In recent years, government has increased the prices of petroleum products many times. However it was unknown if these price increases would lead to higher poverty levels. It was also unknown what the relative effects would be on different socioeconomic groups. Previous efforts to assess the economic impacts of the increases have been limited by the little attention paid to poverty effects. This gives ambiguous results as to its poverty impacts. The study employed a Computable General Equilibrium Micro-simulation Analysis to assess the impacts on poverty. This enabled explicit poverty assessments to be carried out by incorporating information on households from a national household survey. The study also explored the possible role fiscal policy can play in managing the effects of the subsidy removal. Finally the study adds to existing knowledge by assessing the impacts of selective removal of petroleum subsidies by disaggregating the refined petroleum products sub-sector."