2011-06: Shifts in exchange rate regime and inflation persistence in Vietnam, 1992-2010 (Working paper)

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Nguyen, Tran-Phuc
Nguyen, Tom
Su, Jen-Je
Singh, Tarlok
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Nguyen, Tom

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2011
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25 pages

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Abstract

A number of studies have found that more flexible exchange rate regimes (ERRs) tend to be associated with greater inflation persistence. In this paper we investigate whether that proposition applied in the case of Vietnam over the period 1992-2010. Following an approach similar to that of Alogoskoufis and Smith (1991) and Huang and Gu (2007), we found no evidence that inflation persistence in Vietnam was systematically higher under more flexible ERRs than under more rigid ERRs. Indeed, rolling regressions suggested that inflation persistence reached its highest level in the sub-period 2004 to 2007, which can be characterized as a hard-peg regime.

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Copyright © 2010 by author(s). No part of this paper may be reproduced in any form, or stored in a retrieval system, without prior permission of the author(s).

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Economics and Business Statistics

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F41 - Open Economy Macroeconomics

F47 - Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation: Models and Applications

E31 - Price Level; Inflation; Deflation

E58 - Central Banks and Their Policies

Exchange rate regime

inflation persistence

hard peg

soft peg

Vietnam

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