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The Relationship between the EUR/RON Exchange Rate and The Romanian Inflation

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  • Catalina Adriana Handoreanu

Abstract

Using monthly data from January 2000 to October 2007, the present working paper analyses the degree of exchange rate pass through into inflation in the case of Romania. The econometrical method used is the recursive VAR that suggested a low level of the influence of the exchange rate on inflation. Despite the historical role of the exchange rate on the macroeconomical adjustment, this finding is consistent with the inflation targeting regime adopted by National Bank of Romania.

Suggested Citation

  • Catalina Adriana Handoreanu, 2008. "The Relationship between the EUR/RON Exchange Rate and The Romanian Inflation," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 71-82.
  • Handle: RePEc:ers:journl:v:xi:y:2008:i:4:p:71-82
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    File URL: http://www.ersj.eu/repec/ers/papers/08_4_p7.pdf
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    References listed on IDEAS

    as
    1. Burstein, Ariel Tomas & Eichenbaum, Martin & Rebelo, Sérgio, 2002. "Why Are Rates of Inflation So Low After large Devaluations," CEPR Discussion Papers 3178, C.E.P.R. Discussion Papers.
    2. Taylor, John B., 2000. "Low inflation, pass-through, and the pricing power of firms," European Economic Review, Elsevier, vol. 44(7), pages 1389-1408, June.
    3. Svensson, Lars E. O., 2000. "Open-economy inflation targeting," Journal of International Economics, Elsevier, vol. 50(1), pages 155-183, February.
    4. Choudhri, Ehsan U. & Hakura, Dalia S., 2006. "Exchange rate pass-through to domestic prices: Does the inflationary environment matter?," Journal of International Money and Finance, Elsevier, vol. 25(4), pages 614-639, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Foreign Exchange; Inflation; Price Level; Monetary Policy; Romania;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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