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Author/Editor:
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Razafimahefa, Ivohasina Fizara
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Publication Date:
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June 01, 2012
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Electronic Access:
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Free Full text
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
This paper analyzes the exchange rate pass-through to domestic prices and its determinants in sub-Saharan African countries. It finds that the pass-through is incomplete. The pass-through is larger following a depreciation than after an appreciation of the local currency. The average elasticity is estimated at about 0.4. It is lower in countries with more flexible exchange rate regimes and in countries with a higher income. A low inflation environment, a prudent monetary policy, and a sustainable fiscal policy are associated with a lower pass-through. The degree of pass-through has declined in the SSA region since the mid-1990s following marked improvements in macroeconomic and political environments.
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Order a print copy
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Series:
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Working Paper No. 12/141
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Subject(s):
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Exchange rates | Exchange rate regimes | Exports | Imports | Price elasticity | Prices | Sub-Saharan Africa
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Author's Keyword(s):
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Exchange rate | inflation | impulse responses. |
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