Economic Reforms and Exchange Rate Pass-Through to Domestic Prices in India

Abstract

Several authors have recently interpreted the ECB's two-pillar framework as separate approaches to forecast and analyse inflation at different time horizons or frequency bands. The ECB has publicly supported this understanding of the framework. This paper presents further evidence on the behaviour of euro area inflation using band spectrum regressions, which allow for a natural definition of the short and long run in terms of specific frequency bands, and causality tests in the frequency domain. The main finding is that variations in inflation are well explained by low-frequency movements of money and real income growth and high-frequency fluctuations of the output gap.

Monetary Policy Transmission in an Emerging Market Setting

“…In India we find evidence of incomplete, but statistically significant, exchange rate pass though. This finding agrees with the existing studies on exchange rate pass-through in India (Ghosh and Rajan, 2007;Khundrakpam, 2007). Although, low exchange rate pass-through is generally observed in low-inflation countries, however, there can be other factors which reduce pass through in domestic prices.…”

Exchange rate pass-through: The case of China

“…Otherwise, if supposing the income's effect is time-lagged, we should include a lagged variable in Eq. (6) (Khundrakpam, 2007) as in this article. assume the exporter can readjust the marginal cost rapidly; therefore, the explanatory variable Δpp * is not time-lagged.…”

“…5 According to Bailliu and Fujii (2004) and Khundrakpam (2007), the simplified Equation can be formulated as:…”

Is There a Link Between Exchange Rate Pass-Through and the Monetary Regime: Evidence from Sub-Saharan Africa and Latin America

“…Khundrakpam (2007) posits that the greater the share of imports in consumption and in production, the higher the degree of exchange rate pass through. finds that pass-through tends to be higher in smaller economies and lower in larger economies because foreign exporters are more willing to maintain market shares in large markets.…”