Analyzing the Relationship Between Exchange Rate Pass-Through and Inflation Persistence

Abstract/Contents

Abstract: I measure the relationship between exchange rate pass-through and inflation persistence across 22 small and medium sized economies with mostly flexible exchange rates. Using data from the International Monetary Fund, national statistics offices, and the Bank for International Settlements, my estimates for exchange rate pass-throughs and inflation persistence present two main results. First, I find that a positive, non-linear relationship exists between exchange rate pass-through and inflation persistence across the sample countries. Second, I find some evidence that countries that have had varying levels of monetary policy success display a similar non-linear relationship between exchange rate pass-through and inflation persistence across time. These two results suggest that the dynamics of inflation depend in part on the sensitivity to inflationary shocks and thus the efficacy of monetary policy.

DOI	https://doi.org/10.25740/kx902sb7177
Location	https://purl.stanford.edu/kx902sb7177

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License: This work is licensed under a Creative Commons Attribution Non Commercial 4.0 International license (CC BY-NC).

Preferred citation: Jasson, D. (2022). Analyzing the Relationship Between Exchange Rate Pass-Through and Inflation Persistence. Stanford Digital Repository. Available at https://purl.stanford.edu/kx902sb7177

Stanford University, Department of Economics, Honors Theses

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