Subsidizing power

Jeroen Klomp*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

This study explores whether the amount of fossil fuel subsidies paid by the government is subject to an election cycle. Theoretically, it is not a priori directly clear whether the provision of fossil fuel subsidies should go up or down when elections are upcoming. On the one hand, governments may reap electoral benefits from offering additional support in an election year since voters generally prefer candidates from whom they expect to receive greater material well-being by reducing the prices of basic goods. On the other hand, if the number of recipients is only small or when they are politically not well organized, reducing fossil fuel subsidies to finance a tax cut or an increase in other public spending areas that benefit and attract more voters might be a more successful re-election strategy. My main empirical findings clearly show a U-shaped election effect. It turns out that election cycles encourage fossil fuel support only in countries that have either a large or small fossil fuel demand. In these countries, governments are more inclined to provide additional fossil fuel support in an election year. In turn, I do not find any significant evidence for the notion that upcoming elections create a window of opportunity to reduce fossil fuel subsidies. Finally, the significant election effects are in particular visible during presidential elections.

Original languageEnglish
Pages (from-to)300-321
JournalScottish Journal of Political Economy
Volume67
Issue number3
Early online date17 Dec 2019
DOIs
Publication statusPublished - Jul 2020

Keywords

  • elections
  • fossil fuel subsidies
  • political budget cycles

Fingerprint Dive into the research topics of 'Subsidizing power'. Together they form a unique fingerprint.

Cite this