This paper reviews evidence on the impact of fuel subsidy reform on household welfare in developing countries. On average, the burden of subsidy reform is substantial and is approximately neutrally distributed across income groups; a $0.25 decrease in the per liter subsidy results in a 5% decrease in income for all groups. More than half of this impact arises from the indirect impact on prices of other goods and services consumed by households. Fuel subsidies are a costly approach to protecting the poor due to substantial benefit leakage to higher income groups; in absolute terms, the top income quintile captures six times more in subsidies than the bottom.

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.The resulting slacks for the various years are the inputs of K, L, E and M that would not have been needed to be utilised if the technologies of 1966, 1969 and 1971 were then available.The most common "binding constraint" in this LP analysis is the level of intermediate materials, M. It is not necessary to infer that output in those years was in fact restricted by M. Rather, intermediate material usage, and to some extent energy usage, has, in general, been linearly related to output even in short term movements. By contrast, as expected, slack capital increases in years of actual production decline, e.g., 1954, 1958, 1970. Slacks are computed as the residual resources after the theoretical output has been produced. The lack of secular trend in slack K appears after the theoretical production of the efficient output, not the actual output.The strength of fine inferences really depends on the accuracy of the data as economic measurements. Nevertheless, an important and robust result is that large declines in productive efficiency appear in years of economic downturn-1948, 1954 and 1968. The resulting slacks for the various years are the inputs of K, L, E and M that would not have been needed to be utilised if the technologies of 1966, 1969 and 1971 were then available.The most common "binding constraint" in this LP analysis is the level of intermediate materials, M. It is not necessary to infer that output in those years was in fact restricted by M. Rather, intermediate material usage, and to some extent energy usage, has, in general, been linearly related to output even in short term movements. By contrast, as expected, slack capital increases in years of actual production decline, e.g. , 1954, 1958, 1970. Slacks are computed as the residual resources after the theoretical output has been produced. The lack of secular trend in slack K appears after the theoretical production of the efficient output, not the actual output.The strength of fine inferences really depends on the accuracy of the data as economic measurements. Nevertheless, an important and robust result is that large declines in productive efficiency appear in years of economic downturn-1948, 1954 and 1968.

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