Understanding Changes in Exchange Rate Pass-Through

Yelena Takhtamanova

No 2008-13, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: Recent research suggests that there has been a decline in the extent to which firms "pass through" changes in exchange rates to prices. Beyond providing further evidence in support of this claim, this paper proposes an explanation for the phenomenon. It then presents empirical evidence of a structural break during the 1990s in the relationship between the real exchange rate and CPI inflation for a set of 14 OECD countries. It is suggested that the recent reduction in the real exchange rate pass-through can be attributed in part to the low-inflation environment of the 1990s.

Keywords: pass-through; inflation; monopolistic competition (search for similar items in EconPapers)
JEL-codes: E31 E52 F41 (search for similar items in EconPapers)
Pages: 40
Date: 2008-02-01
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mon and nep-opm
Note: First Draft: July 2003. This Draft: February 2008.
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Understanding changes in exchange rate pass-through (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfwp:2008-13

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DOI: 10.24148/wp2008-13

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