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Inflation Targeting and Exchange Rate Regimes in Emerging Markets, Christian Ebeke, Armand Fouejieu

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Abstract
This paper investigates the effects of the adoption of inflation targeting (IT) on the choice of exchange rate regime in emerging markets (EMs), conditional on certain macroeconomic conditions. Using a large sample of EMs and after controlling for the selection bias associated with the adoption of IT, we find that IT countries on average have a relatively more flexible exchange rate regime than other EMs. However, the flexibility of the exchange rate regime shows strong heterogeneity among IT countries depending on their degree of openness and exposure to FX risks. Moreover, we find that the marginal effect of IT adoption on the exchange rate flexibility increases with the duration of the IT regime in place, and with the propensity scores to adopt it
Table Of Contents
Cover -- Contents -- I. Introduction -- II. Data and Preli minary Discussion -- A. Financial Instability -- B. External Debt -- C. Financial Development -- D. Inflation and Exchange Rate Pass-Through -- E. Economic Openness -- III. Empirical Framework: Ordered Probit/Logit Models -- A. The Model -- B. Results -- C. Robustness Checks -- IV. Propensity Score Matching Estimates -- A. Model -- B. Results -- C. Robustness: Rosenbaum Bounds -- V. Conclusion -- Appendix -- Tables -- 1. Random Effects Ordered Probit Estimates -- 2. Random Effects Ordered Logit Estimates -- 3. Matching Estimates -- Figure -- 1. Adoption of Inflation Targeting, ERR, and Macroeconomic Conditions -- References -- Appendix -- Appendix Tables -- 1. De Facto Exchange Rate Regime Classification -- 2. Sample -- 3. Data and Sources -- 4. Robustness-Random Effects Ordered Probit Estimates (Controlling for Crisis Dummies) -- 5. Robustness-Random Effects Ordered Probit Estimates (Controlling for Central Bank Independence) -- 6. Robustness-Linear Probability Model -- 7. Probit Model of the Matching Estimates
Language
eng
Literary Form
non fiction
Physical Description
1 online resource (37 pages)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781513521718

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