Exchange Rate Policy and Inflation in Acceding Countries: The Role of Pass-through
This paper analyzes the link between the choice of exchange rate regime and inflationary performance in four acceding countries to the EU: the Czech Republic, Hungary, Poland and Slovenia. The results allow a clear ranking of countries according to the size of the pass-through effect and the importance of exchange rate shocks to overall inflationary performance. In particular, perfect pass-through effect can be associated with accommodative exchange rate policy, which can moreover become the most important source of inflationary pressures. The analysis suggests that for CEEC-4 an early adoption of the Euro can provide the most efficient framework for reducing inflation.
|Date of creation:||01 Apr 2004|
|Date of revision:|
|Contact details of provider:|| Postal: 724 E. University Ave, Wyly Hall 1st Flr, Ann Arbor MI 48109|
Phone: 734 763-5020
Fax: 734 763-5850
Web page: http://www.wdi.umich.edu
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
- Darvas, Zsolt, 2001. "Exchange rate pass-through and real exchange rate in EU candidate countries," Discussion Paper Series 1: Economic Studies 2001,10, Deutsche Bundesbank, Research Centre.
- Guillermo Calvo & Michael Kumhof & Oya Celasun, 2002. "Nominal Exchange Rate Anchoring Under Inflation Inertia," IMF Working Papers 02/30, International Monetary Fund.
- Maurizio Michael Habib, 2002. "Financial contagion, interest rates and the role of the exchange rate as shock absorber in Central and Eastern Europe," International Finance 0209004, EconWPA.
- Jonathan McCarthy, 2000.
"Pass-through of exchange rates and import prices to domestic inflation in some industrialized economies,"
111, Federal Reserve Bank of New York.
- Jonathan McCarthy, 2007. "Pass-Through of Exchange Rates and Import Prices to Domestic Inflation in Some Industrialized Economies," Eastern Economic Journal, Eastern Economic Association, vol. 33(4), pages 511-537, Fall.
- J. McCarthy, 1999. "Pass-through of exchange rates and import prices to domestic inflation in some industrialised economies," BIS Working Papers 79, Bank for International Settlements.
- Soren Johansen & Katarina Juselius, 2001.
"Controlling Inflation in a Cointegrated Vector Autoregressive Model with an Application to US Data,"
01-03, University of Copenhagen. Department of Economics.
- Soren JOHANSEN & Katarina JUSELIUS, 2001. "Controlling Inflation in a Cointergrated Vector Autoregressive Model with an Application to US Data," Economics Working Papers ECO2001/02, European University Institute.
- Choudhri, Ehsan U. & Faruqee, Hamid & Hakura, Dalia S., 2005.
"Explaining the exchange rate pass-through in different prices,"
Journal of International Economics,
Elsevier, vol. 65(2), pages 349-374, March.
- Hamid Faruqee & Dalia Hakura & Ehsan U. Choudhri, 2002. "Explaining the Exchange Rate Pass-Through in Different Prices," IMF Working Papers 02/224, International Monetary Fund.
- Ilan Goldfajn & Sergio R.C. Werlang, 2000.
"The pass-through from depreciation to inflation : a panel study,"
Textos para discussão
423, Department of Economics PUC-Rio (Brazil).
- Ilan Goldfajn & Sérgio Ribeiro da Costa Werlang, 2000. "The Pass-through from Depreciation to Inflation: A Panel Study," Working Papers Series 5, Central Bank of Brazil, Research Department.
- Coricelli, Fabrizio & Jazbec, Bostjan, 2001.
"Real Exchange Rate Dynamics in Transition Economies,"
CEPR Discussion Papers
2869, C.E.P.R. Discussion Papers.
- Coricelli, Fabrizio & Jazbec, Bostjan, 2004. "Real exchange rate dynamics in transition economies," Structural Change and Economic Dynamics, Elsevier, vol. 15(1), pages 83-100, March.
- Coenen, Günter & Vega, Juan Luis, 1999.
"The demand for M3 in the euro area,"
Working Paper Series
0006, European Central Bank.
- Gunter Coenen & Juan Luis Vega, 2000. "The Demand for M3 in the Euro Area," Econometric Society World Congress 2000 Contributed Papers 0976, Econometric Society.
- Igor MASTEN, 2002. "How Important Is the Shock-Absorbing Role of the Real Exchange Rate?," Economics Working Papers ECO2002/06, European University Institute.
- Leo Bonato & Andreas Billmeier, 2002.
"Exchange Rate Pass-Through and Monetary Policy in Croatia,"
IMF Working Papers
02/109, International Monetary Fund.
- Billmeier, Andreas & Bonato, Leo, 2004. "Exchange rate pass-through and monetary policy in Croatia," Journal of Comparative Economics, Elsevier, vol. 32(3), pages 426-444, September.
- Ki-Ho Kim, 1998. "US inflation and the dollar exchange rate: a vector error correction model," Applied Economics, Taylor & Francis Journals, vol. 30(5), pages 613-619.
- Rahbek, Anders & Christian Kongsted, Hans & Jorgensen, Clara, 1999.
"Trend stationarity in the I(2) cointegration model,"
Journal of Econometrics,
Elsevier, vol. 90(2), pages 265-289, June.
- Clara Jørgensen & Hans Christian Kongsted & Anders Rahbek, 1996. "Trend-Stationarity in the I(2) Cointegration Model," Discussion Papers 96-12, University of Copenhagen. Department of Economics.
- Jose Manuel Campa & Linda S. Goldberg, 2002.
"Exchange rate pass-through into import prices: a macro or micro phenomenon?,"
149, Federal Reserve Bank of New York.
- Jose Manuel Campa & Linda S. Goldberg, 2002. "Exchange Rate Pass-Through into Import Prices: A Macro or Micro Phenomenon?," NBER Working Papers 8934, National Bureau of Economic Research, Inc.
- Campa, Jose M. & Goldberg, Linda S., 2002. "Exchange rate pass-through into import prices: A macro or micro phenomenon?," IESE Research Papers D/475, IESE Business School.
- Anindya Banerjee & Lynne Cockerell & Bill Russell, 2000.
"An I(2) Analysis of Inflation and the Markup,"
Dundee Discussion Papers in Economics
120, Economic Studies, University of Dundee.
- Martin Uribe, 2002.
"Real Exchange Rate Targeting and Macroeconomic Instability,"
NBER Working Papers
9294, National Bureau of Economic Research, Inc.
- Uribe, Martin, 2003. "Real exchange rate targeting and macroeconomic instability," Journal of International Economics, Elsevier, vol. 59(1), pages 137-159, January.
- Martin Uribe, 1995. "Real exchange rate targeting and macroeconomic instability," International Finance Discussion Papers 505, Board of Governors of the Federal Reserve System (U.S.).
- Fabrizio Coricelli & Bostjan Jazbec, 2002. "Accession to the European Union: Real Exchange Rate Dynamics for Candidate Countries," Rivista di Politica Economica, SIPI Spa, vol. 92(1), pages 109-138, January-F.
- Johansen, S., 1991.
"A Statistical Analsysis of Cointegration for I(2) Variables,"
77, Helsinki - Department of Economics.
- Johansen, Søren, 1995. "A Stastistical Analysis of Cointegration for I(2) Variables," Econometric Theory, Cambridge University Press, vol. 11(01), pages 25-59, February.
- Paruolo, Paolo & Rahbek, Anders, 1999. "Weak exogeneity in I(2) VAR systems," Journal of Econometrics, Elsevier, vol. 93(2), pages 281-308, December.
- TomÃ¡s Holub & Martin CihÃ¡k, 2001. "Convergence of Relative Prices and Inflation in Central and Eastern Europe," IMF Working Papers 01/124, International Monetary Fund.
- Søren Johansen, 2005. "Interpretation of Cointegrating Coefficients in the Cointegrated Vector Autoregressive Model," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(1), pages 93-104, 02.
- Arratibel, Olga & Rodriguez-Palenzuela, Diego & Thimann, Christian, 2002. "Inflation dynamics and dual inflation in accession countries: a 'New Keynesian' perspective," Working Paper Series 0132, European Central Bank.
- Paruolo, Paolo, 1996. "On the determination of integration indices in I(2) systems," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 313-356.
- Habib, Maurizio Michael, 2002. "Financial contagion, interest rates and the role of the exchange rate as shock absorber in Central and Eastern Europe," BOFIT Discussion Papers 7/2002, Bank of Finland, Institute for Economies in Transition.
- Katarina Juselius, 2001. "European integration and monetary transmission mechanisms: the case of Italy," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 341-358.
- FFF1Alexander A. NNN1Weinreb, 2003. "Change and instability," Demographic Research Special Collections, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 1(12), pages 373-396, September.
When requesting a correction, please mention this item's handle: RePEc:wdi:papers:2004-674. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Laurie Gendron)
If references are entirely missing, you can add them using this form.