Exchange Rate Regime And Anti-inflation Performances

The exchange rate regime is an important part of a country's macroeconomic policies.What kind of exchange rate regime a country chooses has a very important impact on the country's macroeconomic goals.Price stability is one of the important macroeconomic goals.The function of the exchange rate system to stabilize prices is an important symbol to measure its desirability.Inflation is an important problem in the development of emerging economies.Therefore,it is necessary to find out what kind of exchange rate regime in emerging economies is conducive to good anti-inflation performance.However,there is no consistent conclusion on the theoretical study of the relationship between them.Although there are a large number of empirical studies,there is less systematic research on the relationship between exchange rate regime and anti-inflation performance in emerging market economies.Therefore,this article takes emerging economies as the research object,examines the relationship between exchange rate regime and the performance of anti-inflation,and finally discusses the choice of RMB exchange rate regime from the perspective of anti-inflation.The main task of this paper is to explore the impact of exchange rate regime on the performance of anti-inflation in emerging economies.In order to analyze this issue,the paper is divided into the following five parts: In the first part,we describe the research background and significance of this article,review and compare relevant literature on inflation and exchange rate system.Finally,it is found that there is a disagreement in the understanding of the relationship between them in the academic.The second part is the theoretical basis of this article.In this part,we use the normative analysis method to sort out the classic inflation-related theories firstly,then analyze the nominal anchor theory of exchange rates,and finally review the Mundell-Fleming model and related theories.By reviewing these classical theories,it can be concluded that the system of inflation impact factors is very large.Based on the nominal exchange rate anchor theory,the exchange rate regime as an influencing factor is introduced into the framework of inflation analysis.And the Mundell-Fleming model constructs the bridge to analyze the relationship between exchange rate regime and inflation.In the third part,the concept of emerging economies is firstly defined,and then the macroeconomic characteristics of emerging economies and the macroeconomic policies implemented are analyzed.This section focuses on a preliminary analysis of the relationship between exchange rate regime selection and inflation in the past.The fourth part is the empirical part of this paper.By constructing an empirical model and drawing empirical research conclusions,there is a positive correlation between the stability of exchange rate regime and the performance of anti-inflation for emerging economies.In the fifth part,we shift our perspective to the relationship between RMB exchange rate regime and the performance of anti-inflation.In this section,we discuss the future selection trend of RMB exchange rate regime by reviewing its historical progress and combining with China's anti-inflation performance target.Based on the full-text study and the combination of theoretical and empirical analysis,the following conclusions can be drawn: For emerging economies,the stability of the exchange rate regime is linked to better anti-inflation performance.The stronger the stability of the exchange rate regime,the better the anti-inflation performance.The more volatile the exchange rate regime,the worse the anti-inflation performance.Finally,it puts forward policy recommendations: Whether for China or other countries,if price stability is the primary objective of macroeconomic policies in a certain period of time,these emerging economies can reduce exchange rate fluctuations in the management of the exchange rate regime,choose a more stable exchange rate system,and fully exploit the credibility effect of exchange rate anchors and currency balance effects.The innovation of this paper has two aspects: First,in the selection of indicators for the exchange rate regime,previous scholars generally used dummy variables or standard deviations of exchange rate fluctuations as alternatives to the exchange rate regime when they constructed the influencing factor system of inflation.This article draws on the exchange rate stability index proposed by Aizenman(2010)and uses this index as an alternative variable to the exchange rate regime,which can more realistically reflect the role that exchange rate regime selection plays in economic activities.Second,in empirical research methods,scholars usually performed ordinary least-squares estimation on static panel data,and performed systematic moment estimation or differential-moment estimation on dynamic panel data in previous academic studies.The sample data in this article is rather special.It is long panel data.In this paper,a feasible generalized least square estimation is made for static panel data,and dynamic bias correction estimation is made for dynamic panel data.