Price and Exchange Rate Dynamics in Kenya: An Empirical Investigation

Ndung'U, N-S

Working Papers from African Economic Research Consortium

Abstract: The paper investigates the relationships between domestic and foreign price levels and the exchange rate and other macro-variables. The real exchange rate is estimated as a cointegrating vector that spans the variables in a purchasing power parity relation. An exchange rate pass-through equation is estimated, and it is seen that the rate of inflation is affected largely by the pass-through effects from exchange rate changes and the world rate of inflation.

Keywords: INFLATION; PRICES; EXCHANGE RATE; KENYA (search for similar items in EconPapers)
JEL-codes: E31 F31 (search for similar items in EconPapers)
Date: 1997

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