Suppose that the country adopted inflation targeting strategy in 2005. Using a dummy variable approach, show...
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Suppose that the country adopted inflation targeting strategy in 2005. Using a dummy variable approach, show how you test if the ERPT coefficient has changed (structural break) with the adaptation of inflation targeting strategy (before and after 2005). Explain the steps of the test technically and how you interpret the result practically. (20 pt) Suppose that the country adopted inflation targeting strategy in 2005. Using a dummy variable approach, show how you test if the ERPT coefficient has changed (structural break) with the adaptation of inflation targeting strategy (before and after 2005). Explain the steps of the test technically and how you interpret the result practically. (20 pt)
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The ERPT Exchange Rate PassThrough coefficient measures the extent to which changes in the exchange ... View the full answer
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