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Explaining the Exchange Rate Pass-Through in Different Prices

This paper examines the performance of different new open economy macroeconomic models in explaining the exchange rate pass-through in a wide range of prices. Quantitative versions of different models are used to derive the dynamic response of various prices to an exchange rate shock. Predicted resp...

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Bibliographic Details
Main Author: Faruqee, Hamid
Other Authors: Hakura, Dalia, Choudhri, Ehsan
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2002
Series:IMF Working Papers
Subjects:
Inflation
Import Prices
Labour; Income Economics
Exchange Rate Pass-through
Currency; Foreign Exchange
Deflation
Open Economy Macroeconomics
Consumer Prices
Labor
Foreign Exchange
Price Level
Exports
Labor Economics: General
Prices
Macroeconomics
Exchange Rates
Export Prices
Imports
Labor Economics
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:This paper examines the performance of different new open economy macroeconomic models in explaining the exchange rate pass-through in a wide range of prices. Quantitative versions of different models are used to derive the dynamic response of various prices to an exchange rate shock. Predicted responses are compared with the evidence based on VAR models to examine how well different models fit the data. The results show that the best-fitting model incorporates a number of features highlighted by different strands of the literature: sticky prices, sticky wages, distribution costs, and a combination of local and producer currency pricing
Physical Description:32 pages
ISBN:9781451875331

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