Fuel Subsidies in Ecuador: A Computable General Equilibrium Model for Targeting Evaluation
Fuel subsidies have been an enduring policy in Ecuador’s political and economic history. Given their lack of targeting and high opportunity cost, they have been amply criticized. As of 2017, the Ecuadorian government started a budget consolidation plan that so far has involved seven reforms to subsi...
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| Format: | Article |
| Language: | English |
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Cambridge University Press
2025-06-01
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| Series: | Latin American Research Review |
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| Online Access: | https://www.cambridge.org/core/product/identifier/S1542427824000385/type/journal_article |
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| author | Cristhian Montenegro-Casa José Ramírez-Álvarez |
| author_facet | Cristhian Montenegro-Casa José Ramírez-Álvarez |
| author_sort | Cristhian Montenegro-Casa |
| collection | DOAJ |
| description | Fuel subsidies have been an enduring policy in Ecuador’s political and economic history. Given their lack of targeting and high opportunity cost, they have been amply criticized. As of 2017, the Ecuadorian government started a budget consolidation plan that so far has involved seven reforms to subsidies policy in less than seven years. In late 2019, in response to social unrest motivated by a temporal elimination of fuel subsidies, the government pledged to study new targeting mechanisms for this policy to mitigate the impact on the most vulnerable sectors. This work seeks to contribute to that effort by evaluating the macroeconomic effects of these subsidies and serving as a guideline for targeting. A computable general equilibrium model is used to assess counterfactual scenarios. The results suggest that by implementing progressiveness and productive linkage criteria, targeting household final consumption and intermediate consumption is a feasible way to reduce the reforms’ negative effects. |
| format | Article |
| id | doaj-art-75e1e33cf5684b65ad8a778a0fc814cc |
| institution | DOAJ |
| issn | 1542-4278 |
| language | English |
| publishDate | 2025-06-01 |
| publisher | Cambridge University Press |
| record_format | Article |
| series | Latin American Research Review |
| spelling | doaj-art-75e1e33cf5684b65ad8a778a0fc814cc2025-08-20T03:22:18ZengCambridge University PressLatin American Research Review1542-42782025-06-016033736510.1017/lar.2024.38Fuel Subsidies in Ecuador: A Computable General Equilibrium Model for Targeting EvaluationCristhian Montenegro-Casa0https://orcid.org/0000-0003-1809-0406José Ramírez-Álvarez1https://orcid.org/0000-0001-9624-3549National Polytechnic School, Quito, EcuadorNational Polytechnic School, Quito, EcuadorFuel subsidies have been an enduring policy in Ecuador’s political and economic history. Given their lack of targeting and high opportunity cost, they have been amply criticized. As of 2017, the Ecuadorian government started a budget consolidation plan that so far has involved seven reforms to subsidies policy in less than seven years. In late 2019, in response to social unrest motivated by a temporal elimination of fuel subsidies, the government pledged to study new targeting mechanisms for this policy to mitigate the impact on the most vulnerable sectors. This work seeks to contribute to that effort by evaluating the macroeconomic effects of these subsidies and serving as a guideline for targeting. A computable general equilibrium model is used to assess counterfactual scenarios. The results suggest that by implementing progressiveness and productive linkage criteria, targeting household final consumption and intermediate consumption is a feasible way to reduce the reforms’ negative effects.https://www.cambridge.org/core/product/identifier/S1542427824000385/type/journal_articlepolicy evaluationfuel subsidiescomputable general equilibrium modelsEcuadorevaluación de políticasubsidios a los combustiblesmodelos de equilibrio general computableEcuador |
| spellingShingle | Cristhian Montenegro-Casa José Ramírez-Álvarez Fuel Subsidies in Ecuador: A Computable General Equilibrium Model for Targeting Evaluation Latin American Research Review policy evaluation fuel subsidies computable general equilibrium models Ecuador evaluación de política subsidios a los combustibles modelos de equilibrio general computable Ecuador |
| title | Fuel Subsidies in Ecuador: A Computable General Equilibrium Model for Targeting Evaluation |
| title_full | Fuel Subsidies in Ecuador: A Computable General Equilibrium Model for Targeting Evaluation |
| title_fullStr | Fuel Subsidies in Ecuador: A Computable General Equilibrium Model for Targeting Evaluation |
| title_full_unstemmed | Fuel Subsidies in Ecuador: A Computable General Equilibrium Model for Targeting Evaluation |
| title_short | Fuel Subsidies in Ecuador: A Computable General Equilibrium Model for Targeting Evaluation |
| title_sort | fuel subsidies in ecuador a computable general equilibrium model for targeting evaluation |
| topic | policy evaluation fuel subsidies computable general equilibrium models Ecuador evaluación de política subsidios a los combustibles modelos de equilibrio general computable Ecuador |
| url | https://www.cambridge.org/core/product/identifier/S1542427824000385/type/journal_article |
| work_keys_str_mv | AT cristhianmontenegrocasa fuelsubsidiesinecuadoracomputablegeneralequilibriummodelfortargetingevaluation AT joseramirezalvarez fuelsubsidiesinecuadoracomputablegeneralequilibriummodelfortargetingevaluation |