G: Principles and Methods

Abstract

The Malaysian Government's budget has long been under strain due to large allocations for fuel subsidies. This paper assesses the impact of fuel subsidy removal on Malaysia's sectoral output and employment. Using a computable general equilibrium (CGE) model, overall, findings show that fuel subsidy removal increases fuel prices so that input costs also increase, indicating a decline in output and employment in fuel product industries and among manufacturing subsectors. However, negative impacts such as increased production costs would be more than offset by the positive impacts of revenue reallocation policies such as sales tax reduction. This study provides useful information for policy makers in evaluating or updating current subsidy policies to reduce economic losses. ( 7figures, 7 tables, references) 1293/39 Growth expectations and the dynamics of firm entry Kharroubi, E. Bank for International Settlements Working Papers No. 1036 (August 2022), pp. 1-53The article investigates the aggregate conditions that affect the dynamics of firm entry. Sectoral data on firm entry and exit for the main economies of the Euro Area over 2009-2019 is used. Findings show that growth expectations are the key driver for firm entry. More firms are created in response to past exits only when aggregate GDP growth is forecasted to be strong. Similarly, periods of low entry and high exit can be followed by strong entry subsequently, when the economy is expected to grow strongly. The findings are robust to the inclusion of several controls, such as the quality of insolvency proceedings, firms' ability to obtain credit or the presence of barriers to entry. (6 figures, 14 tables, references) 1294/39 Online sales, home delivery, and the platform economy