Although price controls have been widely implemented since Russia's invasion of Ukraine, mainstream economists remain apprehensive about them. Building up buffer stocks of essential commodities is preferable to relying solely on stopgap measures, but buying time is better than allowing supply shocks to wreak havoc on our economies.
MANNHEIM/AMHERST – Is it time to consider adding price caps to the emergency economics toolbox? The unprecedented surge in energy prices that followed Russia’s invasion of Ukraine has prompted much soul-searching in Europe regarding the effectiveness of traditional economic-stabilization policies. In response to this energy shock, the European Union has imposed a general price cap on natural gas, and several member states have capped profit margins, staple foods, and rents, in addition to reintroducing windfall taxes.
MANNHEIM/AMHERST – Is it time to consider adding price caps to the emergency economics toolbox? The unprecedented surge in energy prices that followed Russia’s invasion of Ukraine has prompted much soul-searching in Europe regarding the effectiveness of traditional economic-stabilization policies. In response to this energy shock, the European Union has imposed a general price cap on natural gas, and several member states have capped profit margins, staple foods, and rents, in addition to reintroducing windfall taxes.