IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/9212.html
   My bibliography  Save this paper

Price Controls : Good Intentions, Bad Outcomes

Author

Listed:
  • Guenette,Justin Damien

Abstract

The use of price controls is widespread across emerging markets and developing economies, including for food and key imported and exported commodities. Although they are sometimes used as a tool for social policy, price controls can dampen investment and growth, worsen poverty outcomes, cause countries to incur heavy fiscal burdens, and complicate the effective conduct of monetary policy. Replacing price controls with expanded and better-targeted social safety nets, coupled with reforms to encourage competition and a sound regulatory environment, can be pro-poor and pro-growth. Such reforms need to be carefully communicated and sequenced to ensure political and social acceptance. Where they exist, price control regimes should be transparent and supported by well-capitalized stabilization funds or national hedging strategies to ensure fiscal sustainability.

Suggested Citation

  • Guenette,Justin Damien, 2020. "Price Controls : Good Intentions, Bad Outcomes," Policy Research Working Paper Series 9212, The World Bank.
  • Handle: RePEc:wbk:wbrwps:9212
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/735161586781898890/pdf/Price-Controls-Good-Intentions-Bad-Outcomes.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Laborde,David & Lakatos,Csilla & Martin,William J., 2019. "Poverty Impact of Food Price Shocks and Policies," Policy Research Working Paper Series 8724, The World Bank.
    2. Jane Mpapalika & Christopher Malikane, 2019. "The Determinants of Sovereign Risk Premium in African Countries," JRFM, MDPI, vol. 12(1), pages 1-20, February.
    3. Maimbo, Samuel Munzele & Henriquez Gallegos, Claudia Alejandra, 2014. "Interest rate caps around the world: still popular, but a blunt instrument," Policy Research Working Paper Series 7070, The World Bank.
    4. Robin Winkler, 2015. "Feast or Famine: The Welfare Impact of Food Price Controls in Nazi Germany," Economics Series Working Papers Number 136, University of Oxford, Department of Economics.
    5. Kouamé, Wilfried A.K. & Tapsoba, Sampawende J.-A., 2019. "Structural reforms and firms’ productivity: Evidence from developing countries," World Development, Elsevier, vol. 113(C), pages 157-171.
    6. Marco Antonio Hernández Oré & Luis Álvaro Sánchez & Liliana D. Sousa & Leopoldo Tornarolli, 2017. "Fiscal and Welfare Impacts of Electricity Subsidies in Central America," World Bank Publications - Books, The World Bank Group, number 28504, December.
    7. Jongrim Ha & M. Ayhan Kose & Franziska Ohnsorge, 2019. "Inflation in Emerging and Developing Economies," World Bank Publications - Books, The World Bank Group, number 30657, December.
    8. Jayne, T.S. & Mason, Nicole M. & Burke, William J. & Ariga, Joshua, 2016. "Agricultural Input Subsidy Programs In Africa: An Assessment Of Recent Evidence," Feed the Future Innovation Lab for Food Security Policy Research Papers 259509, Michigan State University, Department of Agricultural, Food, and Resource Economics, Feed the Future Innovation Lab for Food Security (FSP).
    9. Ghosh, Madanmohan & Whalley, John, 2004. "Are price controls necessarily bad? The case of rice in Vietnam," Journal of Development Economics, Elsevier, vol. 73(1), pages 215-232, February.
    10. John Baffes & M. Ayhan Kose & Franziska Ohnsorge & Marc Stocker, 2015. "The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses," Koç University-TUSIAD Economic Research Forum Working Papers 1504, Koc University-TUSIAD Economic Research Forum.
    11. Mr. Kangni R Kpodar & Moataz El-Said & Mr. David Coady & Mr. Paulo A Medas & David Locke Newhouse & Mr. Robert Gillingham, 2006. "The Magnitude and Distribution of Fuel Subsidies: Evidence from Bolivia, Ghana, Jordan, Mali, and Sri Lanka," IMF Working Papers 2006/247, International Monetary Fund.
    12. Ha,Jongrim & Kose,Ayhan & Ohnsorge,Franziska Lieselotte, 2019. "Understanding Inflation in Emerging and Developing Economies," Policy Research Working Paper Series 8761, The World Bank.
    13. Paolo Verme & Abdlekrim Araar (ed.), 2017. "The Quest for Subsidy Reforms in the Middle East and North Africa Region," Natural Resource Management and Policy, Springer, number 978-3-319-52926-4, November.
    14. Paolo Verme, 2017. "Subsidy Reforms in the Middle East and North Africa Region: A Review," Natural Resource Management and Policy, in: Paolo Verme & Abdlekrim Araar (ed.), The Quest for Subsidy Reforms in the Middle East and North Africa Region, chapter 0, pages 3-31, Springer.
    15. David G. Tarr, 2017. "The Welfare Costs of Price Controls for Cars and Color Televisions in Poland: Contrasting Estimates of Rent-Seeking from Recent Experience," World Scientific Book Chapters, in: Trade Policies for Development and Transition, chapter 11, pages 241-269, World Scientific Publishing Co. Pte. Ltd..
    16. Nikhil Patel & Agustín Villar, 2016. "Measuring inflation," BIS Papers chapters, in: Bank for International Settlements (ed.), Inflation mechanisms, expectations and monetary policy, volume 89, pages 9-21, Bank for International Settlements.
    17. Uwe Deichmann & Fan Zhang, 2013. "Growing Green : The Economic Benefits of Climate Action," World Bank Publications - Books, The World Bank Group, number 13194, December.
    18. Cardoso, Eliana A., 1991. "Deficit finance and monetary dynamics in Brazil and Mexico," Journal of Development Economics, Elsevier, vol. 37(1-2), pages 173-197, November.
    19. Aparajita Goyal & John Nash, 2017. "Reaping Richer Returns [Obtenir de meilleurs résultats]," World Bank Publications - Books, The World Bank Group, number 25996, December.
    20. Shi, Xunpeng & Sun, Sizhong, 2017. "Energy price, regulatory price distortion and economic growth: A case study of China," Energy Economics, Elsevier, vol. 63(C), pages 261-271.
    21. Newbery, D M G & Stiglitz, J E, 1979. "The Theory of Commodity Price Stabilisation Rules: Welfare Impacts and Supply Responses," Economic Journal, Royal Economic Society, vol. 89(356), pages 799-817, December.
    22. Elena I. Ianchovichina & Josef L. Loening & Christina A. Wood, 2014. "How Vulnerable are Arab Countries to Global Food Price Shocks?," Journal of Development Studies, Taylor & Francis Journals, vol. 50(9), pages 1302-1319, September.
    23. Richard Newfarmer & Martha Denisse Pierola, 2015. "Trade in Zimbabwe," World Bank Publications - Books, The World Bank Group, number 21985, December.
    24. Benedict CLEMENTS & Hong‐Sang JUNG & Sanjeev GUPTA, 2007. "Real And Distributive Effects Of Petroleum Price Liberalization: The Case Of Indonesia," The Developing Economies, Institute of Developing Economies, vol. 45(2), pages 220-237, June.
    25. Weitzman, Martin L, 1991. "Price Distortion and Shortage Deformation, or What Happened to the Soap?," American Economic Review, American Economic Association, vol. 81(3), pages 401-414, June.
    26. Murphy, Frederic & Pierru, Axel & Smeers, Yves, 2019. "Measuring the effects of price controls using mixed complementarity models," European Journal of Operational Research, Elsevier, vol. 275(2), pages 666-676.
    27. David M. G. Newbery & Joseph E. Stiglitz, 1982. "Risk Aversion, Supply Response, and the Optimality of Random Prices: A Diagrammatic Analysis," The Quarterly Journal of Economics, Oxford University Press, vol. 97(1), pages 1-26.
    28. Mundaca, Gabriela, 2017. "Energy subsidies, public investment and endogenous growth," Energy Policy, Elsevier, vol. 110(C), pages 693-709.
    29. Paolo Verme & Abdelkrim Araar, 2017. "The Quest for Subsidies Reforms in the Middle East and North Africa Region," World Bank Publications - Books, The World Bank Group, number 25783, December.
    30. Leonardo Vera, 2017. "In search of stabilization and recovery: macro policy and reforms in Venezuela," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 40(1), pages 9-26, January.
    31. Mr. Fabian Valencia & Chang Ma, 2018. "Welfare Gains from Market Insurance: The Case of Mexican Oil Price Risk," IMF Working Papers 2018/035, International Monetary Fund.
    32. Supee Teravaninthorn & Gaël Raballand, 2009. "Transport Prices and Costs in Africa : A Review of the International Corridors," World Bank Publications - Books, The World Bank Group, number 6610, December.
    33. Loening, Josef L., 2011. "Middle East and North Africa Countries' Vulnerability to Commodity Price Increases," MPRA Paper 33393, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wheeler,Collette Mari & Baffes,John & Kabundi,Alain Ntumba & Kindberg-Hanlon,Gene & Nagle,Peter Stephen Oliver & Ohnsorge,Franziska Lieselotte, 2020. "Adding Fuel to the Fire : Cheap Oil during the COVID-19 Pandemic," Policy Research Working Paper Series 9320, The World Bank.
    2. Jongrim Ha & M. Ayhan Kose & Franziska Ohnsorge, 2021. "Inflation During the Pandemic: What Happened? What is Next?," Koç University-TUSIAD Economic Research Forum Working Papers 2108, Koc University-TUSIAD Economic Research Forum.
    3. Aryanpur, V. & Ghahremani, M. & Mamipour, S. & Fattahi, M. & Ó Gallachóir, B. & Bazilian, M.D. & Glynn, J., 2022. "Ex-post analysis of energy subsidy removal through integrated energy systems modelling," Renewable and Sustainable Energy Reviews, Elsevier, vol. 158(C).
    4. Kose, M. Ayhan & Sugawara, Naotaka & Terrones, Marco E., 2020. "Global Recessions," MPRA Paper 98608, University Library of Munich, Germany.
    5. Kose, Ayhan & Ohnsorge, Franziska, 2020. "Emerging and Developing Economies: Ten Years After the Global Recession," CEPR Discussion Papers 14405, C.E.P.R. Discussion Papers.
    6. Umar Bala & Lee Chin, 2018. "Asymmetric Impacts of Oil Price on Inflation: An Empirical Study of African OPEC Member Countries," Energies, MDPI, vol. 11(11), pages 1-21, November.
    7. Mr. Kangni R Kpodar & Kodjovi M. Eklou & Ms. Stefania Fabrizio, 2019. "Export Competitiveness - Fuel Price Nexus in Developing Countries: Real or False Concern?," IMF Working Papers 2019/025, International Monetary Fund.
    8. Carine Meyimdjui, 2017. "Food Price Shocks and Government Expenditure Composition: Evidence from African Countries," Working Papers halshs-01457366, HAL.
    9. Pedro Moncarz & Sergio Barone & Germán Calfat & Ricardo Descalzi, 2017. "Poverty Impacts of Changes in the International Prices of Agricultural Commodities: Recent Evidence for Argentina (An Ex-Ante Analysis)," Journal of Development Studies, Taylor & Francis Journals, vol. 53(3), pages 375-395, March.
    10. Efstratia Arampatzi & Martijn Burger & Elena Ianchovichina & Tina Röhricht & Ruut Veenhoven, 2018. "Unhappy Development: Dissatisfaction With Life on the Eve of the Arab Spring," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(s1), pages 80-113, October.
    11. Abhishek Chakravarty & Matthias Parey & Greg C Wright, 2021. "The Human Capital Legacy of a Trade Embargo," Journal of the European Economic Association, European Economic Association, vol. 19(3), pages 1692-1733.
    12. Basher, Syed Abul & Raboy, David G. & Kaitibie, Simeon & Hossain, Ishrat, 2012. "The economics of food security in Arab micro states: preliminary evidence from micro data," MPRA Paper 39357, University Library of Munich, Germany.
    13. Serhan Cevik & Tianle Zhu, 2020. "Trinity Strikes Back: Monetary Independence And Inflation In The Caribbean," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(3), pages 375-388, April.
    14. M. Ayhan Kose & Peter S. O. Nagle & Franziska Ohnsorge & Naotaka Sugawara, 2020. "Can This Time Be Different? Policy Options in Times of Rising Debt," Koç University-TUSIAD Economic Research Forum Working Papers 2008, Koc University-TUSIAD Economic Research Forum.
    15. Bekkers, Eddy & Brockmeier, Martina & Francois, Joseph & Yang, Fan, 2017. "Local Food Prices and International Price Transmission," World Development, Elsevier, vol. 96(C), pages 216-230.
    16. Kelbore, Zerihun Getachew, 2013. "Transmission of World Food Prices to Domestic Market: The Ethiopian Case," MPRA Paper 49712, University Library of Munich, Germany.
    17. Belke, Ansgar & Dreger, Christian, 2013. "The Transmission of Oil and Food Prices to Consumer Prices – Evidence for the MENA Countries," Ruhr Economic Papers 448, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    18. repec:fpr:2020cp:5(5 is not listed on IDEAS
    19. Ferraresi, Massimiliano & Kotsogiannis, Christos & Rizzo, Leonzio, 2018. "Decentralization and fuel subsidies," Energy Economics, Elsevier, vol. 74(C), pages 275-286.
    20. Ebenezer G Olamide & Andrew Maredza, 2021. "The Short and Long Run Dynamics of Monetary Policy, Oil Price Volatility and Economic Growth in the CEMAC Region," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(1), pages 78-89, January.
    21. Yevgeny V. BALATSKY & Natalya A. YEKIMOVA & Maksim A. YUREVICH, 2018. "Non-Monetary Factors in the Monetary Policy Transmission Mechanism: Revision of the Inflation Management Strategy," Upravlenets, Ural State University of Economics, vol. 9(5), pages 26-39, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:9212. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.