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The short-term effects of gasoline price subsidy removal in Nigeria: an analysis of the economic and social Impacts

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  • Balogun, Emmanuel Dele

Abstract

This study examines the immediate consequences of gasoline subsidy removal in Nigeria, focusing on economic and social outcomes. Utilizing monthly data from the 2000 to 2024 subsidy removals, the study analyzes inflation trends, transportation costs, public sentiment, and fiscal adjustments. It also estimated via econometrics model, the short-term partial effects of gasoline price subsidy removal on transportation costs and aggregate consumer prices. Findings reveal significant inflationary pressures, social unrest, and disproportionate impacts on low-income households, alongside modest fiscal gains. The study underscores the need for compensatory measures to mitigate short-term shocks. The conclusion is that the removal of gasoline subsidies in Nigeria is a double-edged sword with significant short-term implications. While it offers potential benefits such as reduced fiscal burden, improved government finances, and long-term economic reforms, it also poses immediate challenges, including increased inflation, higher transportation costs, and potential social unrest. The success of this policy will depend on the government’s ability to manage the transition effectively, implement complementary measures to cushion the impact on the populace, and ensure that the long-term benefits outweigh the short-term pains

Suggested Citation

  • Balogun, Emmanuel Dele, 2025. "The short-term effects of gasoline price subsidy removal in Nigeria: an analysis of the economic and social Impacts," MPRA Paper 123659, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:123659
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    File URL: https://mpra.ub.uni-muenchen.de/123659/2/MPRA_paper_123624.pdf
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    References listed on IDEAS

    as
    1. Sangmok Lee & Hadi Salehi Esfahani, 2020. "The effect of fiscal system reform on fiscal policy outcomes," Scottish Journal of Political Economy, Scottish Economic Society, vol. 67(2), pages 186-200, May.
    2. Amann, Juergen & Cantore, Nicola & Calí, Massimiliano & Todorov, Valentin & Cheng, Charles Fang Chin, 2021. "Switching it up: The effect of energy price reforms in Oman," World Development, Elsevier, vol. 142(C).
    3. Hannes Greve & Jann Lay, 2023. "“Stepping Down the Ladder”: The Impacts of Fossil Fuel Subsidy Removal in a Developing Country," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(1), pages 121-158.
    4. Acheampong, Theophilus & Ackah, Ishmael, 2015. "Petroleum Product Pricing, Deregulation and Subsidies in Ghana: Perspectives on Energy Security," MPRA Paper 66116, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Macroeconomics; Monetary policy analysis;

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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