Abstract
This paper has two main aims, both associated with measuring the welfare effects of price changes. First, it examines the distributional effects of the change in the indirect tax system in New Zealand during the mid‐1980s. Second, it examines the distributional impact of recent inflation in New Zealand. The results confirm those of previous studies which found that indirect taxes in New Zealand did not have a substantially larger impact on low income groups compared with high income groups. Furthermore, the introduction of the goods and services tax does not appear to be regressive. However, recent price changes in New Zealand have had a higher impact on the high income groups, although this tendency is quite small.
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