After correction for mean shifts, there is evidence of greater inflation persistence in the post-Bretton Woods period, but no evidence of variation across exchange rate regimes. Each exchange rate regime has its own strengths and weaknesses regarding economic output (Lohi, 2014). Toulaboe and Terry (2013) investigate the link between exchange rate regimesThis implies that aggressive combat of inflation cannot be achieved through exchange rate stabilization in Nigeria. Exchange rate regimes and economic performance conventional wisdom. Mussa (1986) real exchange rates were more variable under floating regimes. New results on relationship between exchange rate regime and growth, inflation. This implies that exchange rate depreciation can bring about an increase in inflation rate in Nigeria. The paper also found that inflationary rate in Nigeria has a lagged cumulative effect. Exchange rate regimes and inflation persistence, IMF Staff Papers 47, pp. 387-402.Indonesia, Iran, Iraq, Jamaica, Jordan, Kenya, Laos, Liberia, Libya, Madagascar, Maldives, Malawi, Malaysia, Mali, Mauritania, Mauritius, Mexico, Morocco, Myanmar, Nepal, Nicaragua, Niger, Nigeria, Oman CBN Journal of Applied Statistics Vol. 7 No. 1(a) (June, 2016). 49. Exchange Rate Pass-Through to Inflation in Nigeria.Exchange regimes play an important role in ERPT. In a fixed exchange rate regime, economic agents adjust prices rapidly because they perceive any change in exchange rate Also how exchange rate can influence inflation rate. Examples. Evaluation and graphs from UK economy.Inflation and Exchange Rates. Tejvan Pettinger July 17, 2017 economics. The study is motivated by the desire to ensure stability in exchange regime through a structurally nexus of interest rate and inflation volatility and targeting.
Using historical data on Nigeria (1971-2010), the paper established asignificant Exchange rate regime refers to the system through which this price is determined and it is one of the most important policy instruments of governments. The choice of exchange rate regime has considerable impact on trade in goods and services, capital flows, inflation According to this view, an exchange rate anchor was particularly effective in countries with high inflation say, high two digits levels thatCapital Flow Reversals, Capital Controls and Exchange Rate Regimes One of the fundamental propositions in recent debates on exchange rate regimes is. Inflation Persistence and Exchange Rate Regimes. G. S.
Alogoskoufis, "Monetary accommodation, exchange rate regimes and inflation persistence," The Economic. For soft pegs, where there are fewer obstacles to devaluation, the evidence is much more ambiguous and more consistent with the causality running from inflation to the exchange rate regime than vice versa. The paper reviews different exchange rate regimes and highlights complexity in developing a typology to place continuum of regimes in distinct categories.However, if inflation persistence or fixed country effects are taken into consideration, there is little difference in inflation rates between soft Table 2. Inflation persistence and exchange rate regimes 198499. Floating exchange rate United States Canada Japan Australia New Zealand United Kingdom Greece Germany Mean (s.d.) of the above. Shifts in Exchange. By following authors. Nguyen Tran Phuc. Monetary Accommodation Exchange Rate Regimes And Inflation Persistence.According to theory, inflation persistence should have less variance across countries under pegged than floating exchange rates, but not necessarily a lower mean. 5. Conclusion and Recommendations. This paper has examined exchange rate regimes and inflation in Nigeria.Inflation persistence under semi-fixed exchange rate regimes: The European evidence, 19741998. Open Economies Review, 16(1), pp. 5176. Rutasitara (2004) studied exchange rate regimes and inflation in Tanzania, their estimated model from quarterly data for 19671995 showed that theChukwuma (2002) examined the real exchange rate distortions and external balance position of Nigeria, based on a single equation procedure. Keywords: Exchange rate Volatility, GDP, FDI, Trade Openness, Inflation, Correlation Matrix, OLS and Granger Causality Test.During the fixed exchange rate regime, the supply of foreign exchange was highly subsidized through the overvaluation of domestic currency. Central banks in inflation targeting countries face the following questions: How strong is the conflict between active exchange rate management and inflation targeting? What are the consequences of maintaining an exchange rate band in an IT regime? The broad objective of this study is to identify, evaluate and address the effect of foreign exchange regimes industrial growth in Nigeria."Exchange Rate Policy, the Real Exchange Rate, and Inflation lesson from Latin American", Working Papers Series 880, The World bank, April 12. 2. Is floating exchange rate regime responsible for inflation persistence in Nigeria?Therefore, this study would examine the inflationary trend in Nigeria under various exchange rate regimes with the view of identifying the real cause of inflation persistence in the country. This article is a condensed version of two reports on exchange rate regimes and formal inflation targets. The author would like to thank Arnr Sighvatsson, Ingimundur Fridriksson and Mr Gudmundsson for useful suggestions. The persistence of relative inflation rates increases with the accommodation of relative inflation rates by exchange rate policy. Managed exchanged rate regimes will result in more persistent inflation differentials than fixed exchange rate regimes. This paper attempts to make a contribution to the literature by exploring theoretically and empirically the relationship between inflation persistence and exchange rate regimes using historical data on UK and US inflation from the mid-ninetieth century onwards. The results show that the impact of exchange rate regime on inflation is not visible in Indian case, which could be because of the offsetting sterilization policy undertaken by Reserve Bank of India (RBI) Nigerias central bank left its key interest rate at a record high to fight inflation after the economy expanded in the third quarter.While the complex regime has helped the official exchange rate converge with the black-market rate, the bank refuses to allow the naira to float freely. This paper investigates the link between exchange rate regimes and inflation performance in developing countries.Second, to account for inflation persistence, as is suggested in many other studies, a lagged dependent variable is included. Concept definition: exchange rate vs. exchange rate policy Exchange rate regimes at a glance Does Nigeria have an exchange rate policy?Exchange Rate Determinants. Balance of trade External Reserves Foreign Direct Investment Interest rate movements Inflation Purchasing Power Parity Oil "Monetary Accommodation, Exchange Rate Regimes and Inflation Persistence," Economic Journal, Royal Economic Society, vol. 102(412), pages 461-480, May.implication on Nigerian Economy particularly the current aimed of inflation target under medium term framework under flexible exchange rates regime.boom periods and persistence increased of crude oil production and its revenue leads increases in the demand of foreign exchange in Nigeria this has between exchange rate regimes and output growth in Nigeria in different periods from 1970 toforeign exchange market and the persistence in the depletion of the countrys external reserves.Mohanty, B Bhanumurthy, N.R (2014). Exchange Rate Regimes and Inflation: Evidence from India. It means that exchange rate fluctuation have little or no influence on inflationary pressure in Nigeria. M. Bleaney, Exchange Rate Regimes and Inflation Persistence, IMF Staff Papers, 247, (2000), 387-402. T.O. Akinbobola. But following this regime led to a high inflation rate in 2004 and it reached 16.5 after it was 4.2 in 2003. So the paper tries to investigate whether there is a relationship between the exchange rate and the inflation rate since the liberalization of the Egyptian pound exchange rate. Their empirical results suggest that lower persistence of inflation in the emerging markets associated with the higher exchange rate pass through.It is argued that under flexible exchange rate regimes changes in the exchange rate are transmitted to prices only if they are considered as persistent and In investigating changes in inflation persistence across time, they all hypothesize a one-to-one relation with changes in the prevailing formal exchange rate regime. In reality, exchange rate regimes appear far more complex than that, especially in recent times. This implies that exchange rate depreciation can bring about an increase in inflation rate in Nigeria. The paper also found that inflationary rate in Nigeria has a lagged cumulative effect. 2.6 Exchange rate depreciation and inflation in Nigeria.There was consequent persistence of exchange rate depreciation of the naira (from 1.5691 naira to 1.0 dollar at the end of September 1986, 7.8950 naira to 1.0 dollar by mid February 1990). Keywords: Exchange rate regime, inflation persistence, hard peg, soft peg, Vietnam.References. Alogoskoufis, G. S1992, Monetary Accommodation, Exchange Rate Regimes and Inflation Persistence. The paper discusses the advantages and disadvantages of alternative exchange rate regimes and ends with a discussion of the possibility of dollarization in the Americas. Key words: Exchange rate systems Inflation targeting Dollarization. ALOGOSKOUFIS, G.S.
(1992), "Monetary accommodation, exchange rate regimes and inflation persistence", Economic Journal 102, 461-80.Malaysia Fiji Bahrain Tanzania Burma Kenya Belize Tonga Nigeria Haiti Cameroon Uruguay Venezuela. Keywords: Inflation persistence, exchange rate regimes, monetary policy, inflation targeting.Monetary accommodation, exchange rate regimes, and inflation persistence, Economic Journal, 102(412), 461-480. In October 1994, the authorities adopted a flexible exchange rate regime and introduced an interbank market for foreign exchange.The key drivers of real exchange rate depreciation in Nigeria are its past values, inflation and money supply growth. Inflation, Openness, and Exchange-Rate-Regimes. Harvard Business School.Final Tables8.pdf. Inflation, Openness, and Exchange-Rate-Regimes The Quest for Short-Term Commitment.(1,2), Nigeria (1,2), Norway (1,2), Oman (1,2), Pakistan (1,2), Panama (1,2), Papua N. Guinea (1,2) The performance of exchange rate regimes in developing countries: Does the classifications scheme matter? CREDIT Research Paper, No. 07/04.Bleaney and Francisco (2005) report that, once inflation persistence or fixed country effects are taken into. 3. account, there is no difference in Exchange rate regimes and inflation and output in sub-saharan countries.for non-CFA countries, which excludes Nigeria) are aggregated using 1990 GDP and PPP exchange rates.(iii) Finally, as persistence in price adjustment or the rate of inflation might occur, a lagged Exchange rate regimes refer to different systems of managing the exchange of a nations currency in terms of other currencies.Hence, there is an indication of the persistence of volatility between the rate of inflation and the Rexrate. This is an indication that the Rexrate in Nigeria is predisposed to Exchange Rate regime and Inflation Persistence in Nigeria. Date Completed: Ongoing. After correction for mean shifts, there is evidence of greater inflation persistence in the post-Bretton Woods period, but no evidence of variation across exchange rate regimes. Monetary growth has been much less accomadative of inflation since. Abstract A higher inflation persistence under flexible exchange rates than under pegged rates is questioned empirically when the mean of inflation shifts with exchange rate regimes. We re-examine the link between exchange rate regimes and inflation persistence with a dynamic panel model in