Too Much Energy

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dc.contributor.author Cali, Massimiliano
dc.contributor.author Cantore, Nicola
dc.contributor.author Iacovone, Leonardo
dc.contributor.author Pereira-Lopez, Mariana
dc.contributor.author Presidente, Giorgio
dc.date.accessioned 2019-10-18T15:32:15Z
dc.date.accessioned 2019-10-26T00:00:25Z
dc.date.available 2019-10-18T15:32:15Z
dc.date.available 2019-10-26T00:00:25Z
dc.date.issued 2019-10
dc.identifier http://documents.worldbank.org/curated/en/670351570710975641/Too-Much-Energy-The-Perverse-Effect-of-Low-Fuel-Prices-on-Firms
dc.identifier.uri http://hdl.handle.net/10986/32584
dc.description.abstract This paper provides novel evidence on the impact of changes in energy prices on manufacturing performance in two large developing economies -- Indonesia and Mexico. It finds that unlike increases in electricity prices, which harm plants' performance, fuel price hikes result in higher productivity and profits of manufacturing plants. The results of instrumental variable estimation imply that a 10 percent increase in fuel prices would lead to a 3.3 percent increase in total factor productivity for Indonesian and 1.2 percent for Mexican plants. The evidence suggests that effects are driven by the incentives that fuel price increases provide to plants towards replacing inefficient fuel-powered with more productive electricity-powered capital equipment. These results help to re-evaluate the policy trade-off between reducing carbon emissions and improving economic performance, particularly in countries with large fuel subsidies such as Indonesia and Mexico. en
dc.language English
dc.publisher World Bank, Washington, DC
dc.relation.ispartofseries Policy Research Working Paper;No. 9039
dc.rights CC BY 3.0 IGO
dc.rights.uri http://creativecommons.org/licenses/by/3.0/igo
dc.subject FUEL SUBSIDY
dc.subject FUEL PRICE
dc.subject ENERGY PRICE
dc.subject ELECTRICITY
dc.title Too Much Energy en
dc.type Working Paper en
dc.rights.holder World Bank
dc.title.subtitle The Perverse Effect of Low Fuel Prices on Firms en

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