Price and Monetary Dynamics Under Alternative Exchange Rate RegimesAccording to theory, inflation persistence should have less variance across countries under pegged than floating exchange rates, but not necessarily a lower mean. The paper tests this prediction on postwar data for OECD countries. After allowing for the upward bias to persistence estimates created by shifts in mean inflation, the paper finds persistence has a greater spread (but not a higher mean) in the floating-rate period, as predicted by theory. Monetary growth has been much less accommodative of inflation under floating rates, most probably because of the shifts in monetary policy rather than those in exchange rate regime. |
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Price and Monetary Dynamics Under Alternative Exchange Rate Regimes Mr.M. F. Bleaney Limited preview - 1999 |
Price and Monetary Dynamics Under Alternative Exchange Rate Regimes Mr. M. F. Bleaney No preview available - 1999 |
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0.29 GDP deflator 0.51 United Kingdom accommodation of inflation Alogoskoufis 1992 Alogoskoufis and Smith auto-correlation Country Fixed average of industrial Bretton Woods system Change Country Fixed chooses its inflation Consumer price inflation countries Consumer price Country Fixed rates D=0 for fixed D=1 for floating Dating of Regime deflator inflation 0.40 equation Estimates of Inflation estimates of persistence exchange rate regimes first-order auto-correlation Country fixed-rate floating exchange rates floating rates floating-rate period France include dummies GDP deflator inflation half of Table individual countries industrial countries Consumer interest rates INTERNATIONAL MONETARY FUND major OECD countries mean shifts monetary accommodation monetary growth monetary policy money supply Obstfeld oil-shock period OLS regression pegged exchange rates pegged-rate regime persistence estimates Point estimates price inflation 0.52 quasi-money growth rates and D=0 Regime Change Country reserve country reserve currency serial correlation shifts in mean United Kingdom 0.25 United States 0.52 weighted average