State-Dependent Exchange Rate Pass-Through
State-Dependent Exchange Rate Pass-Through
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Volume/Issue:
Volume 2023
Issue 086
Publication date: April 2023
ISBN: 9798400240461
$20.00
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Topics covered in this book
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Inflation , Economics- Macroeconomics , Economics / General , Exchange rate , pass-through , inflation , state-dependence , inflation uncertainty , pass-through from the exchange rate , rate pass-through , pass-through coefficient , rate of pass-through , Exchange rate pass-through , Exchange rates , Exchange rate adjustments , Exchange rate arrangements , Global
Summary
We estimate how the rate of pass-through from the exchange rate to domestic prices varies across states of the economy and depending on the shocks that drive fluctuations in the exchange rate. We confirm several results from the literature and uncover new facts. Drawing on the experience of a large sample of advanced and emerging market economies over the past 30 years, we document that exchange rate pass-through significantly larger during periods of high inflation and elevated uncertainty. Using a novel identification strategy, we also show that pass-through is higher when exchange rate fluctuations are driven by U.S. monetary policy.
