Volume : 2, Issue : 7, JUL 2016

FUEL PRICE GAPS

Natalia Dus Poiatti, PhD

Abstract

Governments in emerging countries have usually opted not to fully pass through increases in fuel prices to domestic consumers. On the one hand, fuel price interventions may lead to higher price stability in the short-run. On the other hand, they may negatively impact the trade balance, increase income inequality and signal a lack of commitment to fiscal budget control. The aim of this research project is to study the impacts of the Brazilian fuel price interventions on the macroeconomic uncertainty and sovereign risk.

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