This paper re-examines the findings of Alogoskoufis and Smith (1991), who argue that sharp increases in inflation persistence can be attributed to changes in the exchange rate regime. Using long time series data from the United Kingdom, the United States, Canada and Sweden, we suggest that these authors' emphasis on a post-1967 shift in inflation persistence is misplaced and that there are other equally good candidates to account for changes in inflation persistence such as wars, oil price shocks and central bank reforms. This conclusion is supported by recently developed tests that allow for multiple structural shifts at unknown dates.
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Paper provided by Wilfrid Laurier University, Department of Economics in its series Working Papers with number
97-2.
Find related papers by JEL classification: E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
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