{
  "title": "Pass-Through of External Shocks to Inflation in Sri Lanka",
  "publication": "IMF Working Papers, March 1, 2008",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/pass-through-of-external-shocks-to-inflation-in-sri-lanka-21837",
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  "summary": "This paper investigates pass-through of external shocks (exchange rate, oil price, and import price shocks) to inflation in Sri Lanka. The analysis is based on a vector autoregression (VAR) model that incorporates a distribution chain of pricing.",
  "sections": [
    {
      "heading": "Summary and Main Findings",
      "content": "- Investigates pass-through of external shocks (exchange rate, oil price, and import price shocks) to inflation in Sri Lanka.\n- Analysis finds low and incomplete pass-through of external shocks to consumer inflation.\n- External shocks explain about 25 percent of the variation in consumer price inflation.\n- Low and incomplete pass-through reflects a combination of factors including:\n  - the existence of administered prices,\n  - high content of food in the consumption basket,\n  - low persistence and volatility of the exchange rate.\n- Implication: there is room for domestic policies in controlling inflation."
    },
    {
      "heading": "Methodology",
      "content": "- Empirical approach: vector autoregression (VAR) model.\n- Model incorporates a distribution chain of pricing."
    },
    {
      "heading": "Key Quantitative Results and Statistics",
      "content": "- External shocks explain about 25 percent of the variation in consumer price inflation.\n- Publication details and identifiers:\n  - Pages: 26\n  - Volume: 2008\n  - Issue: 078\n  - Series: Working Paper No. 2008/078\n  - Stock No: WPIEA2008078\n  - ISBN: 9781451869392\n  - ISSN: 1018-5941\n  - DOI: https://doi.org/10.5089/9781451869392.001\n- Author and date:\n  - By Nombulelo Braiton\n  - March 1, 2008"
    },
    {
      "heading": "Policy Implications and Recommendations",
      "content": "- Because pass-through from external shocks to consumer inflation is low and incomplete, domestic policies can play a meaningful role in controlling inflation.\n- Policymakers should consider factors that reduce pass-through in designing inflation management strategies, including:\n  - administered price frameworks,\n  - the high weight of food in consumption baskets and related food price policies,\n  - measures addressing exchange rate persistence and volatility.\n\nIMF Working Papers. Pass-Through of External Shocks to Inflation in Sri Lanka — Nombulelo Braiton (March 1, 2008).\n\n---\n\n Content in this bundle\n\n- wp0878\n  - wp0878 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp0878 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/pass-through-of-external-shocks-to-inflation-in-sri-lanka-21837"
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    "Authors: Nombulelo Braiton",
    "Published: March 1, 2008",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451869392.001",
    "Investigates pass-through of external shocks (exchange rate, oil price, and import price shocks) to inflation in Sri Lanka.",
    "Analysis finds low and incomplete pass-through of external shocks to consumer inflation.",
    "External shocks explain about 25 percent of the variation in consumer price inflation.",
    "Low and incomplete pass-through reflects a combination of factors including:",
    "Implication: there is room for domestic policies in controlling inflation.",
    "Empirical approach: vector autoregression (VAR) model.",
    "Model incorporates a distribution chain of pricing.",
    "External shocks explain about 25 percent of the variation in consumer price inflation.",
    "Publication details and identifiers:",
    "Author and date:",
    "Because pass-through from external shocks to consumer inflation is low and incomplete, domestic policies can play a meaningful role in controlling inflation.",
    "Policymakers should consider factors that reduce pass-through in designing inflation management strategies, including:",
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