How Effective Are Price Regulator’s Price Control Measures?

Deskripsi

The Fijian Competition and Consumer Commission (FCCC) is Fiji’s independent price regulatory institution. If price control measures are effective, they could contribute to inflation mitigation. This note tests the effectiveness of FCCC’s price controlling role by proposing that it does not lead to inflation. Using time-series regression models, we establish the effect of FCCC’s regulatory effectiveness and show that it contributes to a reduction in prices at least five months after regulated prices come into force. We find that inflation declines by 0.5% or 26% of the sample annualized inflation (which is 1.93%).