Can exchange rate pass-through explain the price puzzle?

Syed Ali and Sajid Anwar

Economics Letters, 2016, vol. 145, issue C, 56-59

Abstract: The anomalous behavior of inflation in response to contractionary monetary policy is known as the price puzzle. Using a simple open-economy macroeconomic model, with expectations formed rationally, we show that exchange rate pass-through can help in resolving the price puzzle.

Keywords: Price puzzle; Cost channel; Exchange rate pass-through; Rational expectations (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:145:y:2016:i:c:p:56-59

DOI: 10.1016/j.econlet.2016.05.023

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