Limited Dependent Variable Models Applied to the Workings of Belgian Price Regulation

In recent times many western governments have either considered or actually applied some form of price regulation in order to combat an accelerating worldwide inflation that has respected no one’s national boundaries. The price controls that were applied by governments pressured to take action have been typically collections of pragmatic administrative procedures, requiring the creation of their own operating bureaucracies. Often neither the original arguments that were raised in favor nor the resulting measures enacted were seen by economists as grounded in any coherent piece of orthodox economic theory. There has been many theoretical articles written about these aspects of price regulation, however, empirical studies attempting to discover the consequences of these systems at the level of the individual decision-makers involved have been few due to the unavailability of relevant data. This recent Belgian experience then offers a unique opportunity as a large volume of material has been made available for econometric study.