Oil Spill(over)s: Linkages in Petroleum Product Pricing Policies in West African Countries

Author/Editor:

Mohamed El Harrak ; Antonio David ; Lorraine Ocampos ; Marshall Mills

Publication Date:

May 1, 2011

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper addresses a number of issues regarding petroleum product pricing in Western Africaemphasizing international spillovers. We use panel unit root rests and long-run modeling based on vector error correction models to assess links and convergence in petroleum product prices across countries. Our results indicate that in general over the long-run there is convergence in prices across the countries. The estimation results for gasoline and diesel prices suggest the presence of long-run links between retail prices among the different country groupings with long-run multipliers ranging from 11 to -6.66. The speed of Adjustment to equilibrium varies significantly according to the countrygroupings considered. In contrast, the econometric results for kerosene prices not only indicate a weaker link between prices across countries, but also a much slower adjustment to equilibrium. Inlight of these important spillovers, the need to better coordinate pricing s and tax policies towards petroleum products at the regional level becomes apparent.

Series:

Working Paper No. 2011/102

Subject:

English

Publication Date:

May 1, 2011

ISBN/ISSN:

9781455260379/1018-5941

Stock No:

WPIEA2011102

Pages:

30

Please address any questions about this title to publications@imf.org