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Ukraine Gas Pricing Policy: Distributional Consequences of Tariff Increases
Author:
Ms. Pritha Mitra
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Mr. Ruben V Atoyan
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Series:
IMF Working Papers
Volume/Issue:
Volume 2012: Issue 247
Language:
English
Publication Date:
15 Oct 2012
DOI:
https://doi.org/10.5089/9781475512878.001
ISBN:
9781475512878
ISSN:
1018-5941
Pages:
23
Keywords:
WP; price; elasticity; subsidies; government expenditure and related policies; welfare; price elasticity; interaction elasticity; interaction term; heating tariff; tariff increase; Income; Tariffs; Consumption; Price elasticity; Europe
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Ukraine’s gas pricing policy subsidizes gas and heating for all households. As the cost of imported gas rises, this policy increasingly weighs on government finances, sustains energy over-consumption, dampens investment in delivery systems, and undermines incentives for domestic production. However, gas price hikes have been deferred to the medium-term as they are politically unpopular. Through estimation of household demand functions by income quintiles to evaluate the distributional consequences of tarrif reform, this paper finds that tariff reforms combined with targeted social support can address the economic inefficiencies of the current pricing policy without large welfare costs to the lower income segments of the population.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund