journal article Oct 01, 2004

Monetary policy and exchange rate pass‐through

Abstract
AbstractThe pass‐through of exchange rate changes into domestic inflation appears to have declined in many countries since the 1980s. We develop a theoretical model that attributes the change in the rate of pass‐through to increased emphasis on inflation stabilization by many central banks. This hypothesis is tested on 20 industrial countries between 1971 and 2003. We find widespread evidence of a robust and statistically significant link between estimated rates of pass‐through and inflation variability. We also find evidence that observed monetary policy behaviour may be a factor in the declining rate of pass‐through. Published in 2004 by John Wiley & Sons, Ltd.
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Cited By
264
The Quarterly Review of Economics a...
IMF Economic Review
International Review of Economics &...
Japan and the World Economy
Exchange Rate Pass-Through into Import Prices

José Manuel Campa, Linda S. Goldberg · 2005

Review of Economics and Statistics
Metrics
264
Citations
31
References
Details
Published
Oct 01, 2004
Vol/Issue
9(4)
Pages
315-338
License
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Cite This Article
Joseph E. Gagnon, Jane Ihrig (2004). Monetary policy and exchange rate pass‐through. International Journal of Finance & Economics, 9(4), 315-338. https://doi.org/10.1002/ijfe.253
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