Transmission of International Commodity Prices to Domestic Prices in Bangladesh
In recent years, Bangladesh has experienced persistent price increases, especially of food items, in the domestic market in the backdrop of global increase in food prices. Such price developments in the international commodity markets have brought into forefront the effects of external price changes on domestic inflation, especially in the developing countries. This raises the issue of the existence and extent of import price pass-through to domestic prices. This paper analyzes the relationship between import and domestic prices in Bangladesh during 2000-2008. Using monthly data, the paper explores the relationship between domestic supply and passthrough elasticity and argues that commodities with higher share of domestic supply face a lower pass-through elasticity of import prices on domestic prices.[Bangladesh Bank WP NO 0807]
References listed on IDEAS
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- Charles Engel & John Rogers, 1998. "Regional Patterns in the Law of One Price: The Roles of Geography versus Currencies," NBER Chapters, in: The Regionalization of the World Economy, pages 153-188 National Bureau of Economic Research, Inc.
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- Jacqueline Dwyer & Ricky Lam, 1994. "Explaining Import Price Inflation: A Recent History of Second Stage Pass-through," RBA Research Discussion Papers rdp9407, Reserve Bank of Australia.
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- Tim Hampton, 2001. "How much do import price shocks matter for consumer prices?," Reserve Bank of New Zealand Discussion Paper Series DP2001/06, Reserve Bank of New Zealand. Full references (including those not matched with items on IDEAS)
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