Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/68101
Authors: 
Nogueira, Reginaldo Pinto
Year of Publication: 
2006
Series/Report no.: 
Department of Economics Discussion Paper, University of Kent 06,02
Abstract: 
The paper presents evidence on the exchange rate pass-through for a set of emerging and developed economies before and after the adoption of Inflation Targeting. We use an ARDL model for a sample of developed and emerging market economies to estimate the short-run and the long-run effects of depreciations on prices. The results support the view of the previous literature that the pass-through is higher for emerging than for developed economies, and that it has decreased after the adoption of Inflation Targeting. This reduction, however, does not mean that the pass-through is no longer existent for developed and emerging market economies, especially when it comes to the long-run. This finding highlights the importance of using dynamic models when dealing with the inflation-depreciation relationship. The results also show the important role of foreign producer costs for the imports pricing behaviour in developed economies, and of inflation stability in emerging markets.
Subjects: 
Inflation Targeting
Exchange Rate Pass-Through
JEL: 
E31
E52
F31
F41
Document Type: 
Working Paper

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