Administered Prices and Government Discretion

Vol. 35 No. 3 (2015)

Jul-Sep / 2015
Published July 1, 2015
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Furquim de Azevedo, Paulo, and Felipe C. Serigati. 2015. “Administered Prices and Government Discretion”. Brazilian Journal of Political Economy 35 (3):510-30.

Administered Prices and Government Discretion

Paulo Furquim de Azevedo
Insper e CNPq,
Felipe C. Serigati
Escola de Economia de São Paulo da FGV
Brazilian Journal of Political Economy, Vol. 35 No. 3 (2015), Jul-Sep / 2015, Pages 510-530


Administered prices during the first term of President Dilma were used as an instrument to meet inflation target, so as to subordinate industrial policies to short run macroeconomic aims. This strategy was ineffective to control inflation and distorted investment and consumption decisions. The article shows that prices tend to deviate more the larger their weight in the price index, and tend to vary consistently with the political cycles. The article concludes with policy suggestions to control the negative effect of deviations of government discretion to determine administered prices.

JEL Classification: E31; L32.

Keywords: administered prices inflation target government discretion electoral cycles