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An Empirical Assessment of the Exchange Rate Pass-through in Mozambique

Author

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  • Edson Manguinhane
  • Felix F. Simione

Abstract

Determining the magnitude and speed of the exchange rate passthrough (ERPT) to inflation has been of paramount importance for policy-makers in developed and emerging economies. This paper estimates the exchange rate passthrough in Mozambique using econometric techniques on a sample spanning from 2001 to 2019. Results suggest that the ERPT is assymetric, sizable and fast, with 50 percent of the exchange rate variations passing through to prices in less than six months. Policy-makers should continue to pursue low and stable inflation and develop a strong track record of prudent macroeconomic policies for the ERPT to decline.

Suggested Citation

  • Edson Manguinhane & Felix F. Simione, 2021. "An Empirical Assessment of the Exchange Rate Pass-through in Mozambique," IMF Working Papers 2021/132, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2021/132
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    Cited by:

    1. Narayan, Seema & Cirikisuva, Salote & Naivutu, Revoni, 2023. "A hybrid NKPC inflation model for the small Island state of Fiji," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 873-886.

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