IT Countries: A Breed Apart? the case of Exchange Rate Pass-Through
Marc Pourroy  1@  , Antonia Lopez  2@  
1 : CRIEF, Université de Poitiers
Université de Poitiers
2 : GATE  (GATE)
Université Lumière - Lyon II

This paper estimates the effects of two monetary policy strategies in the exchange rate pass-through (ERPT). To this end, we employ propensity score matching and consider the adoption of a target by a country as a treatment to find suitable counterfactuals to the actual targeters. By controlling for self-selection bias and endogeneity of the monetary policy regime, we show that inflation target has helped in reducing the ERPT, with older regimes more successful than younger ones. However, a de facto flexible exchange rate regime has not noticeable advantages to reduce the extent to which exchange rate fluctuations contribute to inflation instability.

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