Exchange Rate Regimes and Persistence of Inflation in Thailand

Komain Jiranyakul

MPRA Paper from University Library of Munich, Germany

Abstract: This study explored the degree of inflation persistence in Thailand using both monthly headline and sectoral CPI indices during the 1985-2012 period. The results showed that the degree of inflation persistence for the headline inflation did not exist under the fixed exchange rate regime, even though some sectoral inflation series exhibited persistence. Under the floating regime, the headline inflation persistence was low, but various sectoral inflation rates showed low to moderate persistence. Therefore, inflation persistence for the entire sample period was caused by the switch from fixed to floating regime. Furthermore, there seemed to be no monetary accommodation of inflation persistence under the floating regime. Based upon the results from this study, inflation targeting implemented in May 2000 to combat inflation might not fully reduce inflation to the target of price stability.

Keywords: Inflation persistence; exchange rate regimes; monetary policy; inflation targeting (search for similar items in EconPapers)
JEL-codes: C22 E31 (search for similar items in EconPapers)
Date: 2015-08
New Economics Papers: this item is included in nep-cba, nep-ger, nep-mac, nep-mon and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:66203

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