scholarly journals Fear of Floating in Turkey

2015 ◽  
Vol 5 (2) ◽  
pp. 288
Author(s):  
Ilyas Sıklar ◽  
Taner Sekmen
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Currency Crises ◽  
Inflation Targeting ◽  
Foreign Exchange Rates ◽  
Before And After ◽  
Floating Exchange Rate ◽  
Pass Through ◽  
Exchange Rate Pass Through ◽  
Fear Of Floating

<p class="ber"><span lang="EN-GB">Many emerging markets have adopted floating exchange rate regimes after currency crises. Turkey has experienced a floating regime since 2002 combined with inflation targeting. The aim of this paper is to investigate the “fear of floating” phenomenon,</span><span lang="EN-GB"> named by Calvo and Reinhart (2002),</span><span lang="EN-GB"> in the transition to a low and stable inflation environment in Turkey before and after inflation targeting. The results demonstrate that the levels of exchange rate pass-through decreased substantially, thus weakening the “fear of floating” phenomenon in Turkey after inflation targeting. Therefore, we argue whether any reactions of the central bank to foreign exchange rates imply the “fear of floating” or the “fear of inflation”</span></p>

Fear of Free Floating or Forced Exchange Rate Fixing

2004 ◽  
pp. 112-122
Author(s):  
O. Osipova
Keyword(s):  
Exchange Rate ◽  
Financial Crisis ◽  
Exchange Rates ◽  
Inflation Targeting ◽  
Exchange Rate Policy ◽  
Float Exchange Rate ◽  
Floating Exchange Rate ◽  
Rate Policy ◽  
Exchange Rate Arrangements ◽  
Pass Through

After the financial crisis at the end of the 1990 s many countries rejected fixed exchange rate policy. However actually they failed to proceed to announced "independent float" exchange rate arrangement. This might be due to the "fear of floating" or an irreversible result of inflation targeting central bank policy. In the article advantages and drawbacks of fixed and floating exchange rate arrangements are systematized. Features of new returning to exchange rates stabilization and possible risks of such policy for Russia are considered. Special attention is paid to the issue of choice of a "target" currency composite which can minimize external inflation pass-through.

scholarly journals Exchange Rate Pass-Through in Turkey before and after the Adoption of Inflation Targeting Regime

2017 ◽  
Vol 8 (2) ◽  
pp. 37-48 ◽  
Author(s):  
Özcan Karahan
Keyword(s):  
Exchange Rate ◽  
Inflation Targeting ◽  
Single Equation ◽  
Point Of View ◽  
Turkish Economy ◽  
Before And After ◽  
The Exchange Rate ◽  
Pass Through ◽  
Exchange Rate Pass Through ◽  
The Impact

The impact of exchange rate change on the domestic price level which is called as exchange rate pass through has long been of interest in international economics literature. Along with the application of inflation targeting regime widely, the focus of this interest has also evolved to examine the changes in degree and speed of exchange rate pass through under inflation targeting regime. Turkey, adopted Inflation Targeting (IT) as a monetary regime between 2001 and 2006 implicitly and then explicitly, exhibits which was a genuine experience to be analyzed in this respect. From this point of view, the goal of the study is to provide a time-series analysis of exchange rate pass-through for Turkish economy based on single equation Error Correction Model estimation using the monthly data under pre-IT period 1995-2000 and post-IT period 2006-2014. Thus, we try to clarify the effectiveness of inflation targeting regime as monetary policy on the exchange rate pass-through. The findings of the study indicate that the exchange rate pass-through decreased in the post-IT period compared to pre- IT period. Accordingly, it can be argued that the implication of inflation targeting regime reduced exchange rate pass through in Turkey.

scholarly journals ANALYSIS OF EXCHANGE RATE PASS-THROUGH, FEAR OF FLOATING, AND IMPLEMENTATION OF INFLATION TARGETING FRAMEWORK

2018 ◽  
Vol 5 (2) ◽  
pp. 1-9
Author(s):  
Agung Satryo ◽  
Lukytawati Anggraeni
Keyword(s):  
Exchange Rate ◽  
Inflation Targeting ◽  
Middle Income ◽  
Vector Error Correction ◽  
Middle Income Countries ◽  
Vector Error ◽  
Pass Through ◽  
Exchange Rate Pass Through ◽  
Nominal Anchor ◽  
Fear Of Floating

This paper analyze the exchange rate pass-through and fear of floating behavior on 18 countries that adopting Inflation Targeting Framework (ITF). Vector Error Correction Model (VECM) is used: (1) to estimate the effect of exchange rate depreciation to inflation (passthrough); and (2) to examine the indication of fear of floating behavior. The result shows that passthrough effect has decreased in most countries after ITF where middle income countries have higher passthrough than high income countries. This effect did not disappear completely and still has a significant role to drive inflation. The interventions on exchange rate movement can be interpreted more as control of inflation than fear of floating. The implementation of ITF especially in middle income countries needs further to be reconsidered since it requires inflation as the only nominal anchor.

scholarly journals ANALYSIS OF EXCHANGE RATE PASS-THROUGH, FEAR OF FLOATING, AND IMPLEMENTATION OF INFLATION TARGETING FRAMEWORK

2018 ◽  
Vol 5 (2) ◽  
pp. 1-9
Author(s):  
Agung Satryo ◽  
Lukytawati Anggraeni
Keyword(s):  
Exchange Rate ◽  
Inflation Targeting ◽  
Middle Income ◽  
Vector Error Correction ◽  
Middle Income Countries ◽  
Vector Error ◽  
Pass Through ◽  
Exchange Rate Pass Through ◽  
Nominal Anchor ◽  
Fear Of Floating

This paper analyze the exchange rate pass-through and fear of floating behavior on 18 countries that adopting Inflation Targeting Framework (ITF). Vector Error Correction Model (VECM) is used: (1) to estimate the effect of exchange rate depreciation to inflation (passthrough); and (2) to examine the indication of fear of floating behavior. The result shows that passthrough effect has decreased in most countries after ITF where middle income countries have higher passthrough than high income countries. This effect did not disappear completely and still has a significant role to drive inflation. The interventions on exchange rate movement can be interpreted more as control of inflation than fear of floating. The implementation of ITF especially in middle income countries needs further to be reconsidered since it requires inflation as the only nominal anchor.

scholarly journals Monetary policy independence and floating exchange rates: what does the Brazilian evidence tell us?

2004 ◽  
Vol 24 (1) ◽  
pp. 30-37
Author(s):  
CARLOS EDUARDO SOARES GONÇALVES
Keyword(s):  
Developing Countries ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Interest Rates ◽  
Real Interest Rates ◽  
Pass Through ◽  
Exchange Rate Pass Through ◽  
Floating Exchange Rates ◽  
Fear Of Floating

ABSTRACT Some authors have advocated that shifting from fixed exchange rates to floating regimes has not delivered better economic outcomes to developing countries. As the argument goes, pervasive fear of floating in these economies has prevented drops in real interest rates and, more importantly, has been a hindrance in the way towards more monetary policy autonomy. This paper presents evidence suggesting this may not be the case for Brazil. More precisely, there are signs that fear of floating was less acute here (presumably due to low exchange rate pass-through) than elsewhere, and also that policymakers are now targeting monetary policy principally to domestic objectives.

scholarly journals Vehicle Currency Pricing and Exchange Rate Pass-Through

2021 ◽  
Author(s):  
Natalie Chen ◽  
Wanyu Chung ◽  
Dennis Novy
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Great Recession ◽  
Firm Level ◽  
Bilateral Exchange ◽  
The Great Recession ◽  
Pass Through ◽  
Exchange Rate Changes ◽  
Exchange Rate Pass Through ◽  
The Relationship

Abstract Using detailed firm-level transactions data for UK imports, we find that invoicing in a vehicle currency is pervasive, with more than half of the transactions in our sample invoiced in neither sterling nor the exporter’s currency. We then study the relationship between invoicing currencies and the response of import unit values to exchange rate changes. We find that for transactions invoiced in a vehicle currency, import unit values are much more sensitive to changes in the vehicle currency than in the bilateral exchange rate. Pass-through therefore substantially increases once we account for vehicle currencies. This result helps to explain why UK inflation turned out higher than expected when sterling depreciated during the Great Recession and after the Brexit referendum. Finally, within a conceptual framework we show why bilateral exchange rates are not suitable for capturing exchange rate pass-through under vehicle currency pricing. Overall, our results help to clarify why the literature often finds a disconnect between exchange rates and prices when vehicle currencies are not accounted for.

Conclusions

2016 ◽  
Author(s):  
Jeffry A. Frieden
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Exchange Rate Policy ◽  
Theoretical Argument ◽  
Economic Agents ◽  
Cross Border ◽  
Domestic Prices ◽  
Pass Through ◽  
Exchange Rate Pass Through ◽  
Export Competition

This chapter summarizes key findings. This book makes a simple theoretical argument about the distributional implications of exchange rate policy. It suggests that economic actors with important cross-border interests, exposed to currency volatility, will tend to prefer more stable and predictable exchange rates. It also claims that tradables producers will, all else being equal, tend to prefer a depreciated real exchange rate. These concerns will be tempered by the extent of exchange rate pass-through—that is, the degree to which currency movements affect domestic prices. The analysis in this book shows that countries whose economic agents are more involved in cross-border trade are more likely to fix their exchange rates in order to reduce currency volatility. Countries with large groups susceptible to import or export competition—import-competing manufacturers and export farmers—are more likely to choose flexible exchange rates that allow currency depreciations. Governments facing an election encourage or allow currency appreciation that increases the purchasing power of consumers.

Sign in / Sign up

Export Citation Format

Share Document