Pass-Through of Exchange Rates and Import Prices to Domestic Inflation in Some Industrialized Economies

Jonathan McCarthy ()

Eastern Economic Journal, 2007, vol. 33, issue 4, pages 511-537

Abstract: This paper examines the impact of exchange rates and import prices on the domestic PPI and CPI in selected industrialized economies. The empirical model is a VAR incorporating a distribution chain of pricing. Estimating the model over the post-Bretton Woods era, our results indicate that exchange rates have a modest effect on domestic price inflation while import prices have a stronger effect. Pass-through is larger and has a more prominent role in the inflation process in countries with a larger import share and more persistent exchange rates and import prices.

Date: 2007
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Related works:
Working Paper: Pass-through of exchange rates and import prices to domestic inflation in some industrialised economies (1999)
Working Paper: Pass-through of exchange rates and import prices to domestic inflation in some industrialized economies (2000)
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