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Pass-Through to Import Prices: Evidence from Developing Countries

Author

Listed:
  • Miguel Fuentes

    (Instituto de Economía. Pontificia Universidad Católica de Chile.)

Abstract

In this paper I study the pass-through of nominal exchange rate changes to the price of imported goods in four developing countries. The results indicate that 75% of changes in the exchange rate are passed-through to the domestic currency price of imported goods within one quarter. Complete pass-through is attained within one year. There is no evidence that exchange rate pass-through to the price of imported goods has declined over time even in those countries that have managed to reduce inflation significantly and open their economies to foreign competition.

Suggested Citation

  • Miguel Fuentes, 2007. "Pass-Through to Import Prices: Evidence from Developing Countries," Documentos de Trabajo 320, Instituto de Economia. Pontificia Universidad Católica de Chile..
  • Handle: RePEc:ioe:doctra:320
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    File URL: http://www.economia.uc.cl/docs/dt_320.pdf
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    Citations

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    Cited by:

    1. José De Gregorio, 2009. "Exchange Rates, Real Adjustment and Monetary Policy," Economic Policy Papers Central Bank of Chile 34, Central Bank of Chile.
    2. Jinbin Wang & Nan Li, 2010. "Exchange rate pass-through: The case of China," Frontiers of Economics in China, Springer;Higher Education Press, vol. 5(3), pages 356-374, September.
    3. Santiago Justel & Andrés Sansone, 2015. "Exchange Rate Pass-Through to Prices: VAR Evidence for Chile," Working Papers Central Bank of Chile 747, Central Bank of Chile.
    4. Chiara Peroni, 2012. "Testing linearity in term structures," Applied Financial Economics, Taylor & Francis Journals, vol. 22(8), pages 651-666, April.
    5. Mujica, Patricio & Saens, Rodrigo, 2015. "Exchange rate pass-through and inflation targets in Chile," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    6. Ahmad, Yamin S. & Staveley-O’Carroll, Olena M., 2017. "Exploring international differences in inflation dynamics," Journal of International Money and Finance, Elsevier, vol. 79(C), pages 115-135.
    7. repec:chb:bcchec:v:19:y:2016:i:3:p:004-025 is not listed on IDEAS
    8. Roberto Álvarez & Patricio Jaramillo & Jorge Selaive, 2008. "Exchange Rate Pass-Through into Import Prices: The Case of Chile," Working Papers Central Bank of Chile 465, Central Bank of Chile.
    9. Michael Pedersen, 2010. "Propagation of Inflationary Shocks in Chile and an International Comparison of Progagation of Shocks to food and Energy Prices," Working Papers Central Bank of Chile 566, Central Bank of Chile.

    More about this item

    Keywords

    Exchange rate pass-through; local currency pricing; macroeconomics of developing countries;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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