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Inflation, Output and Perfectly Enforceable Price Controls in Orthodox and Heterodox Stabilization Programmes

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  • Mario Reyna-Cerecero
  • George Mavrotas

Abstract

The paper deals with the success of price controls in stabilizing high inflation rates and their effects on the real economy under an imperfect competition setting derived by optimal maximization. Our model builds on Helpman's work of price controls and imperfect competition, and incorporates inflation inertia through adaptive expectations. The model predicts that under these circumstances price controls can be an effective method of curving inflation when they accompany an orthodox monetary restriction programme; incomes policies alone cannot curve inflation substantially.

Suggested Citation

  • Mario Reyna-Cerecero & George Mavrotas, 2003. "Inflation, Output and Perfectly Enforceable Price Controls in Orthodox and Heterodox Stabilization Programmes," WIDER Working Paper Series DP2003-44, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:dp2003-44
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    References listed on IDEAS

    as
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