posted by Leo on .
What effect do lifting of price controls have on inflation in the long run?
I need some ideas...
I think inflation will eventually be under control in the long run, but i don't know what factors will cause that.
Good tough question. Take a shot. I would think that lifting a binding price control (on say rental housing), would 1) raise prices in the short run, followed by 2) a generally lowering of prices as suppliers increase supply and the market clears, followed by 3) stable prices in the particular market (i.e., no inflationary/deflationary pressures).