Exchange rate pass-through in small, open, commodity-exporting economies: Lessons from Canada
Marco Flaccadoro
Journal of International Economics, 2024, vol. 148, issue C
Abstract:
This paper analyses the exchange rate pass-through in small, open, commodity-exporting economies, taking Canada as a case study. I estimate it as being conditional on commodity shocks and compare the results with those of a standard approach, showing that the pass-through sign changes drastically across frameworks for consumer prices. My approach leads to a positive pass-through, thus implying a positive co-movement between exchange rate appreciation and consumer price inflation, conditional on the shocks. Conversely, standard models find a negative pass-through. I explain my findings by using the commodity-exporter characteristic of Canada and the nature of the shocks, which raise the demand for commodities. This, in turn, causes a currency appreciation and has inflationary effects domestically through higher commodity prices.
Keywords: Prices; Exchange rates; Pass-through; Commodity prices; Oil shocks (search for similar items in EconPapers)
JEL-codes: E31 F31 F4 Q02 Q43 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022199624000096
Full text for ScienceDirect subscribers only
Related works:
Working Paper: Exchange rate pass-through in small, open, commodity-exporting economies: lessons from Canada (2022) ![Downloads](/downloads_econpapers.gif)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:148:y:2024:i:c:s0022199624000096
DOI: 10.1016/j.jinteco.2024.103885
Access Statistics for this article
Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and RodrÃguez-Clare, Andrés
More articles in Journal of International Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).