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A multi-country comparison of the linkages between inflation and exchange rate competitiveness

✍ Scribed by Steven B. Kamin; Marc Klau


Publisher
John Wiley and Sons
Year
2003
Tongue
English
Weight
193 KB
Volume
8
Category
Article
ISSN
1076-9307

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✦ Synopsis


Abstract

This paper compares the response of inflation to changes in exchange rate competitiveness in various regions of the world. The paper first presents evidence that an empirical relationship between the rate of inflation and the level of the real exchange rate holds for a large set of countries. It then demonstrates that the responsiveness of inflation to the real exchange rate has been much higher in Latin America than in Asian or industrialized countries. This difference in inflationary responsiveness is not fully explained either by the prior history of inflation or by the extent of openness to foreign trade. Copyright Β© 2003 John Wiley & Sons, Ltd.


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