Structural Reforms and the Distributional Effects of Price Changes in Argentina

This paper focuses on the change in the distribution of consumption in Argentina in the last decade and evaluates the distributional impact of relative price changes to address one dimension of the distributional consequences of massive privatization and de-regulation. The approach used is based on the theory and measurement of marginal tax reform of Feldstein, Guesnerie, Amhad and Stern and others, as developed and implemented by Newbery (1995), using the concept of the "distributional characteristic of goods" as obtained from household expenditure surveys. In general the results contradict the view that relative price changes have had a negative welfare and distributional impact. In particular, the results speak well of the effects due to de-regulations such as the opening-up of the economy to international trade, but they are less positive insofar as privatization is concerned. Although relative price changes due to privatization have had a positive welfare effect, this has been partially reversed in the last years. The paper extends the analysis to other dimensions that are not normally captured by this approach such as 'coverage' (i.e. access by the poor or low-income agents to public infrastructure services) showing positive distributional impacts in this dimension.