Price Controls and Electoral Cycles

Author/Editor:

Carlos M. Asilis ; Pierre-Richard Agénor

Publication Date:

November 1, 1993

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper studies the interactions between electoral considerations and the imposition of price controls by opportunistic policymakers. The analysis shows that a policy cycle emerges in which price controls are imposed in periods leading to the election, and removed immediately afterwards. The shape of the cycle is shown to depend on the periodicity of elections, the relative weight attached by the public to inflation as opposed to the macroeconomic distortions associated with price controls, the nature of wage contracts, and the degree of uncertainty about the term in office.

Series:

Working Paper No. 1993/089

Subject:

Asset prices Inflation Price controls Wage adjustments Wages

English

Publication Date:

November 1, 1993

ISBN/ISSN:

9781451851229/1018-5941

Stock No:

WPIEA0891993

Pages:

24

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