Exchange Rate Pass Through to Prices in Maldives

Iyabo Masha and Chanho Park

No 2012/126, IMF Working Papers from International Monetary Fund

Abstract: This study examines the degree of exchange rate pass through (EPRT) into producer and consumer prices in Maldives. ERPT to consumer prices is first estimated using a nonparametric approach. A recursive vector autoregression is then used to model both consumer and producer price changes. The nonparametric estimation indicates that ERPT to consumer prices is very high, both in absolute terms and relative to other countries. The dynamics of ERPT as derived from the empirical estimation indicate that ERPT to consumer and producer prices is significant but not complete, and that the impact of exchange rate changes persists into the second year.

Keywords: WP; consumer price; output gap; Inflation; Exchange Rate; Maldives; CPI coefficient; PPI price; exchange rate system; nontradable goods price; price development; exchange rate shock; oil price change; inflation outcome; price determination; rufiyaa exchange rate; CPI data; forecasting inflation; Exchange rate pass-through; Exchange rate adjustments; Exchange rates; Consumer price indexes; Global (search for similar items in EconPapers)
Pages: 25
Date: 2012-05-01
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Citations: View citations in EconPapers (7)

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