24 Table 8: Correlation coefficients between pass-through coefficients and vulnerability, macroeconomic variables, and price levels for developing countries

|**Parameter**|**Gasoline**<br>**pass-**<br>**through **|**Diesel**<br>**pass-**<br>**through **|**Kerosene**<br>**pass-**<br>**through **|**LPG**<br>**pass-**<br>**through **|
|---|---|---|---|---|
|Vulnerability in 2009|0.40|0.35|0.40|0.26|
|Vulnerability in 2008|0.41|0.38|0.44|0.29|
|Change in vulnerability, 2009–2008|0.42|0.40|0.51|0.35|
|Currency appreciation, Jan 2009–Jan 2012|0.21|0.15|0.13|0.34|
|Net exporter status (1 for net importer)|-0.45|-0.44|-0.33|-0.29|
|Current account balance as % of GDP|-0.09|0.00|-0.08|-0.09|
|Months of import cover|-0.16|-0.19|-0.18|-0.18|
|GDP per capita in 2009, purchasing power parity|0.07|0.10|0.23|0.03|
|GDP per capita in 2009, market exchange rate|0.09|0.09|0.27|0.05|
|Net importers only|0.46|0.37|0.37|0.27|
|Logarithm of gasoline price in Jan 2009|0.10|0.09|0.07|0.17|
|Gasoline pass-through coefficient|1.00|0.86|0.62|0.57|
|Logarithm of diesel price in Jan 2009|0.20|0.19|0.24|0.23|
|Diesel pass-through coefficient|0.86|1.00|0.62|0.60|
|Logarithm of kerosene price in Jan 2009|0.35|0.46|0.31|0.22|
|Kerosene pass-through coefficient|0.62|0.62|1.00|0.62|
|Logarithm of LPG price in Jan 2009|0.30|0.35|0.20|0.34|
|LPGpass-through coefficient|0.57|0.60|0.62|1.00|

_Source_ : Author’s calculations.

The three vulnerability parameters—which also capture a country’s oil trade status—and pass-through coefficients for other fuels showed medium or strong correlations with the passthrough coefficient of a given fuel. Vulnerability was not strongly correlated with the passthrough coefficients but appeared to affect gasoline, diesel, and kerosene more than LPG, while the correlation coefficient for the change in vulnerability was larger for kerosene price passthrough than for gasoline or diesel. High vulnerability or a large increase in vulnerability may have served as an incentive to make adequate adjustments so as to encourage fuel conservation and reduce the fiscal burden, if any. Conversely, a country with a large, negative vulnerability index would be a major net oil exporter and may not have a strong incentive—or the political flexibility—to adjust prices on the domestic market. Currency appreciation was weakly correlated with pass-through, which may be expected: while currency appreciation may make it easier to pass through price increases, currency depreciation makes the adjustments even harder for the economy to bear. Contrary to the income trends observed when considering medians, GDP per capita was very weakly correlated. A correlation coefficient of 0.88 between gasoline and diesel pass-through coefficients suggests that governments tend to adjust gasoline and diesel prices in similar proportions. Other pass-through coefficients were similarly well correlated with one another, although not as strongly. Correlations with price levels in January 2009 were generally weak, although high initial prices of kerosene and, to a lesser extent LPG, tended to be found in countries with high pass-through coefficients for gasoline and diesel, suggesting that the