Price Controls : Good Intentions, Bad Outcomes
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 c...
| Main Author: | |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/735161586781898890/Price-Controls-Good-Intentions-Bad-Outcomes http://hdl.handle.net/10986/33606 |
| Summary: | 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. |
|---|