Shifts in exchange rate regimes and inflation persistence in Vietnam, 1992 - 2010

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. (J SEA Econ/GIGA)