Exchange Rate Pass-Through in Developing and Emerging Markets: A Survey of Conceptual, Methodological and Policy Issues, and Selected Empirical Findings

Competitive exchange rate and infrastructure in a macrodynamic of economic growth

“…Excessive devaluation might affect the credibility of the fixed exchange rate and, additionally, has a high reversion due to rapid pass-through on non-tradable prices and wages, which is in accordance with the results of Taylor et al (2001). 1 These asymmetries in terms of the size of the devaluation may result from "menu costs"associated with changing prices: small exchange rate variations can be absorbed by firms and only changes exceeding a threshold are passed through prices (see Aron et al 2014 for a survey of exchange rate pass-through studies). A devaluation can alter the inflationary expectations of the public.…”

Asymmetric exchange rate pass-through in an emerging market economy: The case of Mexico

“…Notice that we have added oil prices and unit labor (domestic) cost in the above equation to account for the critique raised by Aron et al (2014) and others. The pass-through shows the level effect of exchange rate on the consumer prices index, which is represented by 1 in Eq.…”

“…Recent research on the issue presents further evidence a break during the 1990s in the real exchange rate-inflation nexus. among others, Mishkin and Savastano (2001), Mishkin and Schmidt-Hebbel (2007), Kara and Öğünç (2008), Bouakez and Repei (2008), Aron et al (2014), Taguchi and Sohn (2014), and Jimenez-Rodriguez and Morales-Zamaquero (2016) who pointedly observe declining ERPT over time. For G-7 countries, Jimenez-Rodriguez and Morales-Zamaquero (2016) find that ERPT exhibits low values (partial ERPT) because of an increased emphasis on monetary policy price stability.…”

“…Recent data shows that there appears to be a little systematic difference between DMs and EMs countries as a whole, once inflation history is accounted for in the model; see also the survey inAron et al (2014).…”

“…We borrow the methodology fromShin et al's (2014) asymmetry ARDL to estimate the parameters of the Phillips curve. In addition, accounting for the shift in monetary policy (IT) is critical for estimating the effect of exchange rate changes on inflation(Kara and Öğünç, 2008),Bouakez and Repei (2008),Aron et al (2014)). We contribute to the literature on the subject by focusing on three important issues; nonlinearities, asymmetries and the relation between ERPT and monetary policy regime.…”