Administered Prices in Japan : Institutional Comparisons with Europe and the United States
July 27, 2016
Kohei Shintani*1, Yoshiyuki Kurachi*2, Shinichi Nishioka*3, Takashi Okamoto
Research and Statistics Department
- *1Currently at the Financial System and Bank Examination Department
- *2Currently at the Monetary Affairs Department
- *3Currently at the International Department
Although the underlying trend in consumer prices has been rising steadily in recent years, administered prices in Japan have stayed more or less flat. In contrast, administered prices in Europe and the United States have consistently moved upward. Differences in the institutional systems of administered prices can be pointed out as one reason for this sharp contrast. Since the 1980s, European countries and the United States have taken measures to (i) enhance management discipline of publicly owned businesses, and (ii) create independent regulatory commissions and enhance independence from the government mainly in terms of price-setting. As a result, administered prices have been set in accordance with labor and investment costs. In the case of Japan, on the other hand, the government has been heavily and directly involved in the price-setting process, and government subsidies have been granted to many public enterprises. This mechanism may act to affect administered prices in our country.
Notice
Bank of Japan Review is published by the Bank of Japan to explain recent economic and financial topics for a wide range of readers. This report, 2016-E-9, is a translation of the original Japanese version, 2016-J-12, published in July 2016. The views expressed in the Review are those of the authors and do not necessarily represent those of the Bank of Japan.
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