Impact of Subsidy Reform with Cash Transfer on the Macro-Economy, Household, and Industry: A Scoping Review

Jing Jing Liu, Norlida Hanim Mohd Salleh, Nor Ghani Md Nor, Masoud Yahoo, Riayati Ahmad

Abstract

As the removal of subsidies carries the risk of economic distortion and public resistance, cash transfers have emerged as a key mitigation strategy against the potential adverse effects of subsidy removal. This study aims to investigate the effectiveness of cash transfers following the removal of subsidies and to identify the conditions necessary for the successful implementation of subsidy reforms. A scoping review was conducted to assess empirical studies on the effectiveness of cash transfers, following the preferred reporting items for systematic reviews and meta-analyses guidelines. The review analyzed impacts on macro-economy, households and industry to determine the overall efficacy of cash transfer reforms. The database includes Web of Science and Scopus. This review reveals that cash transfers can mitigate the adverse effects of subsidy removal. However, they can also trigger inflation. Targeting vulnerable households is more effective in reducing poverty rates and narrowing the poverty gap. The impact on consumption remains inconclusive. Cash transfer reforms also create a ripple effect across industries. This review provides policymakers with a comprehensive understanding of the effectiveness of cash transfers and the complexities involved in their implementation. A robust and accurate database of recipients is essential to ensure that the transfers reach the intended individuals. Additionally, clear and consistent communication, transparency, and accountability are vital for building public understanding, trust, and confidence in subsidy reform. While cash transfer as part of subsidy reform has gained much attention, comprehensive reviews of this topic are limited. This study fills this gap by providing a thorough review of existing research on the impact of cash transfers as a mitigation measure in subsidy reforms. Additionally, it summarizes crucial policy implications and offers suggestions for future research.

 

Keywords: cash transfer, scoping review, subsidy reform.

 

DOI: https://doi.org/10.55463/hkjss.issn.1021-3619.63.3


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References


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