Do exchange rates affect consumer prices? A comparative analysis for Australia, China and India
Document Type
Journal Article
Publisher
Elsevier North-Holland
Faculty
Faculty of Business and Law
School
School of Business / Finance, Economics, Markets and Accounting Research Centre
RAS ID
16458
Abstract
An important issue for exchange rate pass-through (ERPT) is the extent to which exchange rate changes affect the prices of imported goods and the consumer prices. The objectives of this study are to make a comparative study by exploring the literature relating pass-through for import prices and domestic prices in Australia, China and India. In particular, we test whether the exchange rate pass-through to import prices is complete, estimate the pass-through to consumer price index (CPI) to investigate whether there is any association between the pass-through and the average inflation rate across these countries. A structural VAR model is used to examine the exchange rate pass-through over the period 1990-2011. The impulse responses indicate that exchange rates have less effect in the rising domestic prices in China and India. This will have important policy implication for the monetary authorities.
DOI
10.1016/j.matcom.2012.11.002
Comments
Saha, S., & Zhang, Z. (2013). Do exchange rates affect consumer prices? A comparative analysis for Australia, China and India. Mathematics and Computers in Simulation, 93, 128-138. Available here