Distributional consequences of the Russian price liberalization

The Russian price liberalization was implemented in January 1992. Foremost among many areas of concern regarding food price liberalization was the impact on the welfare and nutrition of the poor. This article focuses on the short-term distributional impact of liberalization with alternative approaches to compensation. In this article we use numerical simulations to examine the distributional impact of wage and pension increases when prices are free to respond to higher nominal incomes. Our focus on distribution centers on the welfare of large groups within the Russian Federation, and numerical simulations treat a region with the average attributes of the federation. Wide geographic variation in production and income persists in Russia, and distributional weaknesses remain, as signaled by wide price differentials across cities. Arguments center on intraregional changes in distribution, given fixed supplies at the regional level. -from Authors