Exchange Rate Pass-Through to Domestic Prices
Author | : Ms.Dalia Hakura |
Publisher | : INTERNATIONAL MONETARY FUND |
Total Pages | : 0 |
Release | : 2001-12-01 |
ISBN-10 | : 1451859864 |
ISBN-13 | : 9781451859867 |
Rating | : 4/5 (64 Downloads) |
Download or read book Exchange Rate Pass-Through to Domestic Prices written by Ms.Dalia Hakura and published by INTERNATIONAL MONETARY FUND. This book was released on 2001-12-01 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper tests a hypothesis suggested by Taylor (2000) that a low inflationary environment leads to a low exchange rate pass-through to domestic prices. To test this hypothesis, the paper derives a pass-through relation based on new open economy macroeconomic models. A large database that includes 1979-2000 data for 71 countries is used to estimate this relation. There is strong evidence of a positive and significant association between the pass-through and the average inflation rate across countries and periods. The inflation rate, moreover, dominates other macroeconomic variables in explaining cross-regime differences in the pass-through.