Cesar Carrera () (University of California, Santa Cruz and Central Bank of Peru) Mahir Binici () (University of California, Santa Cruz and Central Bank of Turkey)
Abstract
We provide an empirical analysis about the relationship between exchange rate and different price indexes for each OECD country. We were focused on how different inflation environments could explain a decreasing degree of the exchange rate pass-through over prices in each country. In a second stage, we estimate the relationship between pass-through and prices using individual-country pass-through. We find evidence in favor of the hypothesis that the exchange rate pass-through is lower when it is taken into account environments in which it is observed lower and stables rates of inflation, result which would be associated with a more effective monetary policy in terms of transparency and inflation control.
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Publisher Info
Paper provided by Banco Central de Reserva del Perú in its series Working Papers with number
2006-009.
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