The Macro-Economic Effects of Federal Wage and Price Controls

Abstract

Assuming the Government's anti-inflation program' is fully implemented, what success can it be expected to have in reducing the rate of price and wage inflation over the next two years? What impact will the program have on the distribution of income? In order to answer these questions, simulation studies were carried out using the AERIC short-term forecasting model developed by The Conference Board of Canada.2 A solution of the model was prepared for the interval 4Q1975 through 4Q1977 under the assumption that price and wage controls had not been put into effect. The solution was a forecast of how the Canadian economy might perform over this period if the program of price and