Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/314170 
Authors: 
Year of Publication: 
2022
Citation: 
[Journal:] Journal of Applied Economics [ISSN:] 1667-6726 [Volume:] 25 [Issue:] 1 [Year:] 2022 [Pages:] 432-453
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
This study investigates the pass-through of exchange rate shocks to different aggregate prices in China. The baseline analysis is carried out with vector autoregressive models incorporating a distribution chain of pricing, and various modifications are examined for robustness. The central results show an appreciation of the local currency tends to suppress domestic inflation at the early production stages, although the pass-through effect only amounts to a moderate degree for consumer prices. As the contribution of external factors to the persistently low inflation environment mostly has been modest, the paper suggests that the monetary authority can contribute to the permanent component of low exchange rate pass-through to domestic inflation, by continually conducting a credible and efficient stable-inflation policy.
Subjects: 
distribution chain
Exchange rate pass-through
inflation
policy design
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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