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Pass Through del Tipo de Cambio en los Precios de Bienes Transables y No Transables en Costa Rica
[Exchange Rate Pass Through into the Prices of Tradable and Non Tradable Goods in Costa Rica]

Author

Listed:
  • Leon, Jorge
  • Laverde, Bernal
  • Duran, Rodolfo

Abstract

This paper estimates short run and long run coefficients of exchange rate pass through in to the prices of tradable and non-tradable goods in Costa Rica. The coefficients are estimated by OLS. A VAR analysis is conducted in order to estimate the dynamic process between exchange rate and inflation. Granger causality test and a stability test are conducted too. The short run pass through coefficients are 13% and 10%, for tradable and non-tradable goods respectively and the long run coefficients are 68% and 52% in the same order. There is a second stage pass through of 7% included in the long run coefficient for non-tradable goods. The dynamic analysis shows that the adjustment process of prices as a result of an exchange rate shock takes 17 months for tradable goods and 27 months for non-tradable goods. The Granger causality test shows precedence between variation in the exchange rate and inflation, and between the prices of tradable and non-tradable goods. There is statistical evidence of a structural change in the non-tradable model between the end of 1995 and the beginning of 1996.

Suggested Citation

  • Leon, Jorge & Laverde, Bernal & Duran, Rodolfo, 2002. "Pass Through del Tipo de Cambio en los Precios de Bienes Transables y No Transables en Costa Rica [Exchange Rate Pass Through into the Prices of Tradable and Non Tradable Goods in Costa Rica]," MPRA Paper 44527, University Library of Munich, Germany, revised 2002.
    • Handle: RePEc:pra:mprapa:44527
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    References listed on IDEAS

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    Cited by:

    1. Carlos Brenes Soto & Manfred Esquivel Monge, 2018. "Asymmetries of the Exchange Rate Pass-through to Domestic Prices in Costa Rica during the Exchange Rate Flexibility Period," Monetaria, Centro de Estudios Monetarios Latinoamericanos, CEMLA, vol. 0(1), pages 1-35, january-j.
    2. Gilberto E. Arce & Edgar Robles C., 2004. "The Elasticity of Substitution in Demand for Non-Tradable Goods in Costa Rica," Research Department Publications 3183, Inter-American Development Bank, Research Department.

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    More about this item

    Keywords

    Tipo de Cambio; Inflación; Transables; No Transables;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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