PRICE CONTROLS AND THE SHORT RUN.

PRICE CONTROLS AND THE SHORT RUN (COMMENT). Nick commented on the Venezuelan price controls, are these “attempts at popularity by keeping things cheap for a short time?” The answer is: Yes. Venezuela, Iran and Argentina are running inflation rates between 10 and 20 per cent right now and are using price controls to hold down prices. There has been speculation that Argentina is adopting a short term policy until elections later this fall. The tactic of using price controls while stepping on the economic accelerator was used in 1972 by President Nixon. Based on that experience, it is likely that the long run will be difficult for Venezuela, Iran and Argentina.