Price and welfare effects of tariffs and non-automatic import licences. Evidence for Argentina for the period 2002–2012

Abstract

Since 2005 and especially after the global crisis of 2009, Argentina has reversed some of the economic reforms implemented between 1991 and 2001. Due to restrictions on changing import tariffs, the government at the time turned to the implementation of non-tariff measures, the most important of which was the introduction of non-automatic import licences. Our objective is to analyse the impact of changes in import barriers on consumer welfare from 2002 to 2012, specifically measured by the change in consumer prices. The results suggest that the changes in import barriers led to an increase in the prices of both domestic and imported products. Despite a moderate overall effect, there is heterogeneity across sectors. Changes in non-automatic licences account for most of the impact. The price increase is mainly due to the quality and variety channels of imported goods, with the unit value of imports playing a lesser role. At the household level, all experienced a welfare loss, which increases with the level of per capita expenditure.