 Exchange rate changes and inflation in India: What is the extent of exchange rate pass-through to imports?Venkataramana Yanamandra Economic Analysis and Policy, 2015, vol. 47, issue C, 57-68 Abstract: Absence of inflation hedges and lack of inflation indexation in India make the society very sensitive to inflationary pressures. A potential source of such pressures that is often mentioned is the depreciation of the Indian rupee which has occurred over the last few years. This study computes the exchange rate pass-through into import prices of India at the aggregate level for the period 2003m1 to 2013m3 using both trade-weighted and bilateral USD exchange rates. The study also examines the asymmetry and non-linearity in the exchange rate pass-through at the aggregate level. The results suggest that there is more than complete exchange rate pass-through into Indian import prices in the short run and even higher pass-through in the long run, indicating the inertial effect of rising prices. There is also evidence of non-linearity in exchange rate pass-through, in terms of whether the rupee is appreciating or depreciating, as well as in terms of whether there are small or large changes in the rupee value. Keywords: Exchange rate pass-through; Non-linearity; Inflation; India (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:47:y:2015:i:c:p:57-68 DOI: 10.1016/j.eap.2015.07.004 Access Statistics for this article Economic Analysis and Policy is currently edited by Clevo Wilson More articles in Economic Analysis and Policy from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.