Abstract

LIRA, Bruna  and  PAES, Nelson. Fuel Subsidies Policy in Brazil: A Simulation of the Macroeconomic Impact. Prob. Des [online]. 2019, vol.50, n.196, pp.139-166. ISSN 0301-7036.  https://doi.org/10.22201/iiec.20078951e.2019.196.64510.

Between 2011 and 2014, the Brazilian government granted generous fuel subsidies via Petrobras. This paper adopts a macroeconomic model to estimate the changes that would take place in the consumption and production of fuels and other goods present in the Brazilian economy if the fuel subsidy were removed. The results suggest that the reduction of fuel subsidies, if offset by a reduction in taxation on consumption, capital, or labor, would reduce fuel consumption and increase the consumption and production of other goods. If the withdrawal of the subsidy were offset by a reduction on fuel tax, the consumption of all goods would increase, thereby proving this measure to be the most beneficial course of action.

Keywords : Fuels; subsidies; production; consumption; prices; macroeconomic model.

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