Subsidies and Presidential Approval Ratings: What is the Geopolitical Connection Using the ICRG Risk Methodology?
In this recent IMF Working Paper, the authors consider the impact of fossil fuel subsidy removal on presidential popularity using difference-indifference approaches and a stylized theoretical model.
Analyzing macro level data for two subsidy removal events in Mexico and Bolivia in the early 2010s, the found evidence of a negative impact on presidential approval.
The theoretical probabilistic voting model used – and which employs our ICRG data – predicts that the decline in popularity is driven by high income groups if subsidies are regressive, and that lack of trust in the government lowers popularity of the removal in all income groups. We confirm these predictions using micro level data for the Mexican subsidy removal event.
Our data drives.
The PRS Group
(https://www.imf.org/en/Publications/WP/Issues/2024/11/01/The-Political-Economy-of-Fossil-Fuel-Subsidy-Removal-Evidence-from-Bolivia-and-Mexico-556856)
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