Exchange Rate Pass-Through in Sub-Saharan African Economies and its Determinants
IMF Working Papers, June 1, 2012
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- Exchange Rate Pass-Through in Sub-Saharan African Economies and its Determinants
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Bibliographic details
- Authors: Ivohasina F Razafimahefa
- Published: June 1, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475503982.001
Summary findings
- The pass-through of exchange rates to domestic prices in sub-Saharan African countries 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.
- The degree of pass-through has declined in the SSA region since the mid-1990s following marked improvements in macroeconomic and political environments.
Determinants of pass-through
- Exchange rate regime flexibility:
- Pass-through is lower in countries with more flexible exchange rate regimes.
- Income level:
- Pass-through is lower in countries with a higher income.
- Macroeconomic policy and environment:
- A low inflation environment is associated with a lower pass-through.
- A prudent monetary policy is associated with a lower pass-through.
- A sustainable fiscal policy is associated with a lower pass-through.
Implications for policy
- Policies that reduce inflation and sustain prudent monetary and fiscal stances can contribute to lowering exchange rate pass-through to domestic prices.
- Greater exchange rate flexibility and higher income levels are correlated with reduced pass-through, suggesting structural and regime-related channels for mitigating external price shocks.
Key statistics and publication metadata
- Pages: 24
- Publication date: June 1, 2012
- Author: Ivohasina F Razafimahefa
- Series: Working Paper No. 2012/141
- Issue: 141
- DOI: https://doi.org/10.5089/9781475503982.001
- ISBN: 9781475503982
- ISSN: 1018-5941
- Stock No: WPIEA2012141
Ivohasina F Razafimahefa, "Exchange Rate Pass-Through in Sub-Saharan African Economies and its Determinants", IMF Working Papers 2012, 141 (2012), accessed 9/17/2026, https://doi.org/10.5089/9781475503982.001