Exchange Rate Regimes and Shfts in Inflation Persistence: Does Nothing Else Matter?

Richard Burdekin () and Pierre Siklos ()

Working Papers from Wilfrid Laurier University, Department of Economics

Abstract: This paper re-examines the findings of Alogoskoufis and Smith (1991), who argue that sharp increases in inflation persistence can be attributed to changes in the exchange rate regime. Using long time series data from the United Kingdom, the United States, Canada and Sweden, we suggest that these authors' emphasis on a post-1967 shift in inflation persistence is misplaced and that there are other equally good candidates to account for changes in inflation persistence such as wars, oil price shocks and central bank reforms. This conclusion is supported by recently developed tests that allow for multiple structural shifts at unknown dates.

Keywords: INFLATION; EXCHANGE RATE; ECONOMIC MODELS (search for similar items in EconPapers)
JEL-codes: E31 F33 (search for similar items in EconPapers)
Date: 1997

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Journal Article: Exchange Rate Regimes and Shifts in Inflation Persistence: Does Nothing Else Matter? (1999)
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Persistent link: http://EconPapers.repec.org/RePEc:wlu:wpaper:97-2

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