Economics, Econometrics and Finance
8 years ago

Exchange rate changes in Ireland slow down inflation adjustment speed drastically.

Economic and social review
Pricing to market, exchange rate changes and the transmission of inflation
John D. Fitz Gerald, Fergal Shortall

Paper Summary

This paper looks at how changes in exchange rates affect prices in Ireland. By considering expectations about exchange rates, the researchers created a model that shows how differences in UK prices can impact Irish inflation. The model suggests that after a crisis in the European Exchange Rate Mechanism, prices in Ireland adjusted more slowly to reach a balance.

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