A computable general equilibrium (CQE) model is used to estimate the macroeconomic and distributional effects of the privatization and regulation of utilities in Argentina, begun in 1989. Based on data available after the privatization that indicate different kinds of efficiency gains in electricity, gas, water, and telecommunications, both the privatization and effective regulation are estimated to yield significant macroeconomic benefits. Gains from the privatization accrue mainly to high-income classes, while gains from the effective regulation of newly privatized utilities accrue mainly to lowincome classes. CGE estimates of overall employment effects suggest that privatization was not a major contributor to the dramatic rise in unemployment in Argentina between 1993 and 1995. This rise was more likely due to the "Tequila Effect" of an interest rate shock. Omar Chisari and Carlos Romero are affiliated with the Universidad Argentina de la Empresa in Buenos Aires, and Antonio Estache is with the World Bank Institute (formerly the Economic Development Institute). The authors thank Daniel Benitez for extremely competent research assistance and Shanta Devarajan,

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Relying on a general equilibrium model of Argentina's economy calibrated for 1993 and internalizing all productivity and scale gains achieved up to 1999, this paper isolates the distributional effects of utilities reform from the impact of other reforms taking place in the country during the 1990s. The analysis shows that both private and public agents gain from the increases in productivity and in service access made possible by the utilities reform. In the short term, the public sector benefits from the proceeds of the sale of firms and the associated debt reduction, but greater advantages in the long term accumulate from the expanded taxbase and from the reduction in expenditure flows. Private agents gain from lower costs, lower average tariffs, and improvements in service quality as well as greater employment opportunities resulting from lower production costs. These welfare gains, however, are substantially offset by the 'tequila' and 'vodka' …/…

Any infrastructure reformers concerned with social issues in a developing country need to address two problems. The first is increasing access by the poor, and the second is ensuring consumption affordability, i.e. the ability of the poor to pay for both consumption and the amortization of the access charges. The two are related. The main concern of both policy makers and academics has been to identify options to cut costs so that coverage can be accelerated, focusing on cheaper technologies or on various financing/lending schemes. Latin America has been a pioneer in many aspects of such reform. Nevertheless, the Latin American experience shows that the poor are often the last to benefit from increased access due to reform. While in most countries, the rural poor tend to be omitted from reforms altogether, treatment of urban users varies considerably. Residential users have often been more exposed to increasing connection costs resulting from reform than commercial users,

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