Cadmus - EUI Research Repository (European University Institute) · 2004 · 23 citations · 26 references
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Exchange Rate StabilityBalance Of PaymentTradeExchange RateInflationary PerformanceExchange Rate Pass-throughMonetary PolicyOpen Economy MacroeconomicsInternational FinanceEconomicsAccession CountriesExchange Rate PoliciesExchange Rate RegimesMacroeconomicsExchange Rate MovementBusinessCpi InflationForeign Exchange MarketCurrency Swaps
The paper analyzes how the choice of exchange‑rate regime affects inflation in EU‑acceding countries. It estimates the pass‑through of exchange‑rate changes to CPI inflation and employs I(2) cointegration to examine stochastic nominal trends. The findings rank countries by pass‑through magnitude, associate the effect with the degree of exchange‑rate accommodation, and conclude that accommodative policy is a primary source of inflationary pressures in accession countries.
This paper analyzes the link between the choice of exchange rate regime and inflationary performance in countries acceding to the EU. Estimation of pass-through effect of exchange rate changes to CPI inflation is complemented by I(2) cointegration analysis of stochastic nominal trends. The results allow a clear ranking of countries according to the size of the pass-through effect and the importance of exchange rate shocks to overall inflationary performance. The size of the pass-through effect can be associated with the degree of accommodation in the exchange rate policy. The paper concludes that an accommodative exchange rate policy is one of the main sources of inflationary pressures in accession countries.
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Staggered prices in a utility-maximizing framework
Guillermo A. Calvo · Journal of Monetary Economics · 1983 · 7.3K citations