Energy populism and household welfare

Cont, Walter and Hancevic, Pedro and Navajas, Fernando H. (2011): Energy populism and household welfare.

Abstract

We study a cycle of subsidized energy prices and estimate its welfare impact on households in the Buenos Aires Metropolitan Region. A simple framework explains its emergence in terms of the preference of a median household (voter) for receiving transfer gains followed by a future flow of transfer losses. We evaluate actual transfers and welfare effects that a departure of prices of natural gas and electricity generation from opportunity costs since 2003 had on households and explore the impact of a way back to opportunity cost pricing.

• Item Type: MPRA Paper
• Language: English
• Keywords: energy prices, distortions, subsidies, welfare effects
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H22 - Incidence; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q48 - Government Policy; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D78 - Positive Analysis of Policy Formulation and Implementation

References

Acemoglu D., G. Egorov and K. Sonin (2010), “A Political Theory of Populism”, mimeo, MIT, August. Angel-Urdinola, D., and Q. Wodon (2005), “Do Utility Subsidies Reach the Poor? Framework and Evidence for Cape Verde, Sao Tome, and Rwanda”, Mimeo, World Bank, Washington, DC. Artana D., M. Catena and F. Navajas (2007), “El Shock de los Precios del Petróleo en América Central: Implicancias Fiscales y Energéticas”, Working Paper WP 624, Research Department, Inter-America Development Bank , Washington Bacon, R. and M. Kojima, (2006) M. “Coping with Higher Oil Prices”. ESMAP Report 323/06. The World Bank, August.

Bour E., D. Heymann and F. Navajas (eds) (2004), Latin American Macroeconomic Crisis, Trade and Labour, London: MacMillan.

Edwards S. (2010), Left Behind: Latin America and the False Promise of Populism, University of Chicago press.

Lacau E. (2005), On Populist Reason, London: Verso

Marchionni M., W. Sosa Escudero and J. Alejo (2008), “Efectos distributivos de esquemas alternativos de tarifas sociales: una exploración cuantitativa”, Capítulo 2 en Navajas F. (editor) op.cit.

Navajas F. (1999; 2004), “Structural Reforms and the Distributional Effects of Price Changes in Argentina”, SSRN working paper June 1999; http://papers.ssrn.com/sol3/papers.cfm?abstract_id=178689 .Published in Bour et. al. (2004).

Navajas F. (2006), “Estructuras Tarifarias Bajo Stress”, Económica (La Plata), Año LII, Nº1-2 Enero-Diciembre, 2006, pp. 77-102. Navajas F. (editor) (2008), La Tarifa Social en los Sectores de Infraestructura en la Argentina. Buenos Aires: Ed. TEMAS.

Navajas F. (2009), “Engel Curves, Household Characteristics and Low-User Tariff Schemes in Natural Gas”, Energy Economics, vol.31, 1,pp. 162-168.

Newbery D. (1995), “The distributional impact of price changes in Hungary and the United Kingdom”, Economic Journal,vol. 105, pp.847-63.