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Exchange Rate Regimes and Inflation Persistence

Author

Listed:
  • Michael Bleaney

    (International Monetary Fund)

Abstract

Some empirical research has suggested that inflation is more persistent under floating exchange rates. Theoretically, we should expect a higher variance of inflation persistence across countries under floating rates, but not necessarily a higher mean. It is shown that estimates of inflation persistence are biased upwards by underfitting mean shifts in the sample. After correction for mean shifts, there is evidence of greater inflation persistence in the post-Bretton Woods period, but no evidence of variation across exchange rate regimes. Monetary growth has been much less accommodative of inflation since 1979, with no difference between EMS and non-EMS countries. Copyright 2001, International Monetary Fund

Suggested Citation

  • Michael Bleaney, 2001. "Exchange Rate Regimes and Inflation Persistence," IMF Staff Papers, Palgrave Macmillan, vol. 47(3), pages 1-5.
  • Handle: RePEc:pal:imfstp:v:47:y:2001:i:3:p:5
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    Citations

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    Cited by:

    1. KARFAKIS Costas & SIDIROPOULOS Moïse & TRABELSI Jamel, "undated". "Testing for the Borrowed Credibility Hypothesis: Theory and Evidence from the French Disinflation Strategy," EcoMod2003 330700078, EcoMod.
    2. Jiranyakul, Komain, 2015. "Exchange Rate Regimes and Persistence of Inflation in Thailand," MPRA Paper 66203, University Library of Munich, Germany.
    3. repec:ebl:ecbull:v:6:y:2005:i:2:p:1-15 is not listed on IDEAS
    4. Carlos Robalo Marques, 2005. "Inflation persistence: facts or artefacts?," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    5. Giannellis, Nikolaos & Koukouritakis, Minoas, 2013. "Exchange rate misalignment and inflation rate persistence: Evidence from Latin American countries," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 202-218.
    6. repec:eee:jimfin:v:86:y:2018:i:c:p:244-263 is not listed on IDEAS
    7. Pedro Bação, 2006. "The Performance of Structural Change Tests," Quality & Quantity: International Journal of Methodology, Springer, vol. 40(4), pages 611-628, August.
    8. PKG HARISCHANDRA & George CHOULIARAKIS, "undated". "Do Exchange Rate Regimes Matter for Inflation Persistence? Theory and Evidence from the History of UK and US Inflation," EcoMod2008 23800100, EcoMod.
    9. Qin, Li & Sidiropoulos, Moïse & Spyromitros, Eleftherios, 2013. "Robust monetary policy under model uncertainty and inflation persistence," Economic Modelling, Elsevier, vol. 30(C), pages 721-728.
    10. Giuseppe Diana & Mose Sidiropoulos, 2004. "Central Bank Independence, Speed of Disinflation and the Sacrifice Ratio," Open Economies Review, Springer, vol. 15(4), pages 385-402, October.
    11. Jiranyakul, Komain, 2013. "Exchange Rate Regimes and Persistence of Inflation in Thailand," MPRA Paper 50109, University Library of Munich, Germany.
    12. Evžen Kočenda & Balázs Varga, 2018. "The Impact of Monetary Strategies on Inflation Persistence," International Journal of Central Banking, International Journal of Central Banking, vol. 14(4), pages 229-274, September.
    13. Athanasios Papadopoulos & Giuseppe Diana & Moise Sidiropoulos, 2005. "Central Bank Reform and Inflation Dynamics in the Transition Economies theory and some evidence," Money Macro and Finance (MMF) Research Group Conference 2005 58, Money Macro and Finance Research Group.
    14. Michael Bleaney & Manuela Francisco, 2005. "Inflation persistence and exchange rate regimes: evidence from developing countries," Economics Bulletin, AccessEcon, vol. 6(2), pages 1-15.
    15. Bleaney, Michael & Fielding, David, 2002. "Exchange rate regimes, inflation and output volatility in developing countries," Journal of Development Economics, Elsevier, vol. 68(1), pages 233-245, June.
    16. Geronikolaou, George & Spyromitros, Eleftherios & Tsintzos, Panagiotis, 2016. "Inflation persistence: The path of labor market structural reforms," Economic Modelling, Elsevier, vol. 58(C), pages 317-322.

    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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