Has Exchange Rate Pass-Through Really Declined? Some Recent Insights from the Literature

Abstract

Building on an earlier Review article, the authors critically reassess the premise that exchange rate pass-through (ERPT) has declined in light of recent studies of the issue in the context of a dynamic stochastic general-equilibrium framework. This recent work helps to emphasize the pitfalls of previous studies based on reduced-form models. For example, ERPT to import prices may be larger than the estimated parameters of reduced-form models would indicate. On the other hand, the authors find fairly convincing evidence that measured short-run ERPT to consumer prices has declined because of a shift to more credible monetary policy regimes. In this case, the findings from DSGE models confirm the results from reduced-form models. Insights from recent studies of ERPT based on microdata are examined, and policy implications are discussed.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 12 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.