Exchange rate regimes and inflation persistence

Some empirical research has suggested that inflation is more persistent und er floating exchange rates. Theoretically, we should expect a higher varian ce of inflation persistence across countries under floating rates, but not necessarily a higher mean. It is shown that estimates of inflation persiste nce are biased upwards by, underfitting mean shifts in the sample. After co rrection for mean shifts, there is evidence of greater inflation persistenc e in the post-Bretton Woods period, but no evidence of variation across exc hange rate regimes. Monetary growth has been much less accommodative of inf lation since 1979, with no difference between EMS and non-EMS countries.