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Understanding changes in exchange rate pass-through

Yelena Takhtamanova

Journal of Macroeconomics, 2010, vol. 32, issue 4, 1118-1130

Abstract: Recent research suggests that there has been a decline in the extent to which firms "pass-through" changes in exchange rates to prices. This paper provides further evidence in support of this claim. Additionally, it proposes an explanation for this phenomenon. The paper 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 fourteen OECD countries. It is suggested that the recent reduction in the real exchange rate pass-through can in part be attributed to the low inflationary environment of the 1990s.

Keywords: Pass-through; Inflation; Exchange; rate; Monopolistic; competition; Staggered; price; setting (search for similar items in EconPapers)
Date: 2010
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Working Paper: Understanding changes in exchange rate pass-through (2008) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:32:y:2010:i:4:p:1118-1130

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