The effectiveness of exchange rate regimes in controlling inflation: an econometric study using dynamic threshold panel models (Arabic)

Abstract

This paper aims primarily at the economic measurement of the effect of exchange rate regimes on domestic inflation, in addition to other explanatory variables such as money supply and the inflation lags, imported inflation, wherein this latter is supposed to have a nonlinear effect that varies according to the trade openness, the growth rate of the gross domestic product, and the oil price. We selected for the analysis the period from 1999 to 2019; By applying the Dynamic Panel Threshold models to a sample of 19 countries in the Middle East and North African region in addition to Turkey, Pakistan and Azerbaijan.
The obtained results revealed that the exchange rate regimes have an important role in determining the levels of inflation, and the nature of relationship in the study sample doesn’t differ from what is in the developing countries, but it differs from the emerging and developed countries according to previous studies, where the fixed regimes achieved the best performance in term of inflation, followed by the intermediate and then the floating. Moreover, the imported inflation has a positive effect on the domestic, the trade openness and GDP incite the increase of this effect, the oil price is also important in noting the non-linearity of this relationship.