Shifts in Exchange Rate Regimes and Inflation Persistence in Vietnam, 1992-2010

• Published in: Journal of Southeast Asian economies Vol. 31; no. 2; pp. 256 - 275
• Main Authors: Phuc, Nguyen Tran, Tho, Nguyen Duc, Su, Jen Je, Singh, Tarlok
• Format: Journal Article
• Language: English
• Published: Institute of Southeast Asian Studies 01-08-2014; ISEAS–Yusof Ishak Institute; Institute of Southeast Asian Studies (ISEAS)
• Subjects: Consumer Price Index; Economic growth rate; Economic planning; Economic policy; Exchange rate regimes; Exchange rates; Flexible exchange rates; Foreign exchange rates; Inflation; Inflation (Finance); Inflation rates; International financial institutions; Linear regression; Monetary economics; Monetary policy; Regression analysis; Vietnam; Vietnam
• ISSN: 2339-5095; 2339-5206
• DOI: 10.1355/ae31-2g

A number of studies have found that more flexible exchange rate regimes tend to be associated with greater inflation persistence. This paper investigates whether this finding is applicable to Vietnam from 1992 to 2010. We find no evidence to suggest that inflation persistence in Vietnam was systematically higher under a "soft" peg exchange rate regime than under a "hard" peg. Rolling regressions suggest that inflation persistence peaked during 2004 to 2007, when Vietnam was governed by what may be characterized as a hard-peg regime.