Optimal Stabilization Policy in a Fixprice-Flexprice Model

Much of the theoretical work done in the area of wage and price controls suggests that controls are an effective means for reducing inflation. However, in these same studies too little attention has been paid to the shortages created by the controls. In part this oversight is due to the implicit assumption of markup pricing behavior, which ignores the determination of output. As a result, the potential for misallocation in these studies is severely restricted. Once the importance of supply and demand in price determination is recognized, shortages can easily be induced by the artificial low prices of controls. If in addition, speculations are an important factor, the potential for misallocation increases significantly.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Economics

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2014

Author dc:creator

• Cheung, Chun-Sang

• Economics, Finance

Language dc:language

eng

Identifier

(UMI)AAI8203426

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/67682