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Exchange Rate Pass-Through To Domestic Prices: The Case Of Colombia

  • Peter Rowland

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    This study uses an econometric framework based on an unrestricted vector autoregressive (VAR) model to study exchange rate pass-through to import, producer and consumer prices in Colombia. Exchange rate pass-through is shown to be incomplete. Import prices, nevertheless, respond quickly to an exchange rate change, where some 80 percent of such a change is passed onto prices of imports within 12 months. The corresponding figure for producer prices is 28 percent and for consumer prices 8 percent. We can, consequently, conclude that pass-through is modest for producer prices and very limited for consumer prices. An exchange rate shock does, therefore, only have limited impact on consumer price inflation.

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    File URL: http://www.banrep.gov.co/docum/ensayos/pdf/espe_047-3.pdf
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    Article provided by BANCO DE LA REPÚBLICA - ESPE in its journal ENSAYOS SOBRE POLÍTICA ECONÓMICA.

    Volume (Year): (2004)
    Issue (Month): (December)
    Pages:

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    Handle: RePEc:col:000107:002684
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    1. Menon, Jayant, 1995. " Exchange Rate Pass-Through," Journal of Economic Surveys, Wiley Blackwell, vol. 9(2), pages 197-231, June.
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    13. Catherine L. Mann, 1986. "Prices, profit margins, and exchange rates," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jun, pages 366-379.
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