Inflation targeting and the role of exchange rate pass-through

Arbeitspapier

The paper presents evidence on the exchange rate pass-through for a set of emerging and developed economies before and after the adoption of Inflation Targeting. We use an ARDL model for a sample of developed and emerging market economies to estimate the short-run and the long-run effects of depreciations on prices. The results support the view of the previous literature that the pass-through is higher for emerging than for developed economies, and that it has decreased after the adoption of Inflation Targeting. This reduction, however, does not mean that the pass-through is no longer existent for developed and emerging market economies, especially when it comes to the long-run. This finding highlights the importance of using dynamic models when dealing with the inflation-depreciation relationship. The results also show the important role of foreign producer costs for the imports pricing behaviour in developed economies, and of inflation stability in emerging markets.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Department of Economics Discussion Paper ; No. 06,02

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Monetary Policy ; Foreign Exchange ; Open Economy Macroeconomics
• Subject: Inflation Targeting ; Exchange Rate Pass-Through

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Nogueira, Reginaldo Pinto
• Event: Veröffentlichung
• (who): University of Kent, Department of Economics
• (where): Canterbury
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/68101
• Last update: 10.03.2025, 11:42 AM CET