Fixed or Floating Exchange Regimes: Does it Matter for Inflation?

Quirk, Peter J.

doi:10.5089/9781451855531.001

Cited by 19 publications

(11 citation statements)

References 17 publications

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“…Ghosh et al (1997) find that both the level and variability of inflation are substantially lower under fixed exchange rates than under flexible rates. Their results are contradictory to the conclusion of Quirk (1994), which asserts there is not much relationship between exchange rate regime and inflation behavior. In general, it is quite uncontroversial to state that the insulation property of the flexible exchange rate regime is imperfect (Corden, 1985;Mussa, 1979;Salant, 1977).…”

Section: Introductioncontrasting

confidence: 55%

Effects of U.S. Inflation on Hong Kong and Singapore

Cheung

Yuen

2002

Journal of Comparative Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractStandard economic models predict that the choice of an exchange rate regime has important implications for the interdependency of national monetary policies, which is sometimes measured by the degree of inflation transmission across borders. In this paper, we examine how inflation rates in two small open economies, namely Hong Kong and Singapore, interact with those in the U.S. It is found that the price levels in these three economies are cointegrated. Thus, a vector error correction model is used to study the inflation dynamics. It is found that Hong Kong and Singapore inflation rates, but not the U.S. one, respond to the error correction term. Compared with Singapore, the Hong Kong inflation rate is more responsive to U.S. price shocks. The different responses to U.S. price shocks are consistent with the difference in exchange rate regimes adopted by the two economies.JEL Classification: E31, F42.

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Section: Introductioncontrasting

confidence: 55%

Effects of U.S. Inflation on Hong Kong and Singapore

Cheung

Yuen

2002

Journal of Comparative Economics

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“…Effective exchange rates were used recently as a more appropriate measure of the degree of devaluation in less developed countries (LDCs) (e.g. Overall, as Quirk (1994) observed, differences between the various exchange rate regimes have narrowed, once adjustments in the case of fixed exchange rate regimes are taken into account. Bahmani-Oskooee and Malixi (1992) found that the effective exchange rate has a positive significant effect on inflation in Egypt.…”

Section: Introductionmentioning

confidence: 99%

The Sources of Inflation in Egypt: A Multivariate Co-integration Analysis

El-Sakka¹,

Ghali²

2005

Review of Middle East Economics and Finance

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The aim of this paper is to empirically investigate the sources of inflation in Egypt. For this, price dynamics is herein represented by a vector error-correction model, which we use to test for the existence of a long-run relationship between the consumer price index, real gross domestic product (GDP), the exchange rate, interest rate, money supply and world prices. Then using the augmented VAR approach, we test for Granger non-causality between the different variables and inflation. The main results that are of interest to monetary policy in Egypt suggest that structural reforms based on improving the country's productive capacity, shrinking the budget deficit and credit to the government, are crucial for controlling inflation.

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“…Linkages induced by a fixed exchange rate arrangement can also be gauged by, say, interactions between inflation (Cheung and Yuen, 2002;Ghosh et al, 1997;Quirk, 1994 Apparently, both theoretical and empirical results are ambivalent on the issue. There is not a definite verdict that the prescription of RMB flexibility will give China an independent monetary policy.…”

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confidence: 99%