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Administered Prices and Government Discretion

Author

Listed:
  • Paulo Furquim de Azevedo

    (Insper e CNPq,)

  • Felipe C. Serigati

    (Escola de Economia de São Paulo da FGV)

Abstract

Administered prices during the first term of President Dilma were used as an instrument to meet inflation target, so as to subordinate industrial policies to short run macroeconomic aims. This strategy was ineffective to control inflation and distorted investment and consumption decisions. The article shows that prices tend to deviate more the larger their weight in the price index, and tend to vary consistently with the political cycles. The article concludes with policy suggestions to control the negative effect of deviations of government discretion to determine administered prices. JEL Classification: E31; L32.

Suggested Citation

  • Paulo Furquim de Azevedo & Felipe C. Serigati, 2015. "Administered Prices and Government Discretion," Brazilian Journal of Political Economy, Center of Political Economy, vol. 35(3), pages 510-530, July.
    • Handle: RePEc:ekm:repojs:v:35:y:2015:i:3:id:95360
    DOI: 10.1590/0101-31572015v35n03a08
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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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