An empirical assessment of exchange arrangements and inflation performance

Alexis Cruz-Rodriguez

MPRA Paper from University Library of Munich, Germany

Abstract: This article provides empirical support for the hypothesis that different exchange rate regimes have an impact on inflation in advanced, emerging and developing countries. The effects of different exchange rate regimes on inflation performance are examined through least squares dummy variables regressions using panel data on 125 countries for the post-Bretton Woods (1974-1999). Also, this article addresses the issue of measurement errors in the classification of exchange rate regimes by using four different classification schemes. Three de facto and one de jure classifications are used. Consequently, the sensitivity of these results to alternative exchange rate classifications is also tested. The empirical findings indicate that countries with fixed regimes tend to have a lower inflation rate compared to floating and intermediate exchange rate regimes, particularly in emerging and developing countries.

Keywords: Exchange rate regimes; inflation (search for similar items in EconPapers)
JEL-codes: E31 F31 F33 (search for similar items in EconPapers)
Date: 2016-07-28
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:73005

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