{
  "title": "State-Dependent Exchange Rate Pass-Through",
  "publication": "IMF Working Papers, April 28, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2023/04/28/state-dependent-exchange-rate-pass-through-532680",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2023/04/28/state-dependent-exchange-rate-pass-through-532680",
  "overlayPath": "/en/publications/wp/issues/2023/04/28/state-dependent-exchange-rate-pass-through-532680/index.md",
  "summary": "We estimate how the rate of pass-through from the exchange rate to domestic prices varies across states of the economy and depending on the shocks that drive fluctuations in the exchange rate. We confirm several results from the literature and uncover new facts.",
  "sections": [
    {
      "heading": "Summary and key findings",
      "content": "- Objective: Estimate how the rate of pass-through from the exchange rate to domestic prices varies across states of the economy and depending on the shocks that drive fluctuations in the exchange rate.\n- Confirmed results from the literature and uncovered new facts.\n- Main empirical findings:\n  - Exchange rate pass-through is significantly larger during periods of high inflation.\n  - Exchange rate pass-through is significantly larger during periods of elevated uncertainty.\n  - Pass-through is higher when exchange rate fluctuations are driven by U.S. monetary policy, based on a novel identification strategy.\n- Sample and scope: Drawing on the experience of a large sample of advanced and emerging market economies over the past 30 years."
    },
    {
      "heading": "Methodology and identification",
      "content": "- Approach: State-dependent estimation of pass-through to domestic prices.\n- Novelty: Uses a novel identification strategy to attribute exchange rate fluctuations to U.S. monetary policy and measure differential pass-through associated with that shock.\n- Focus: Variation of pass-through across macroeconomic states (inflation, uncertainty) and across shock origins (including U.S. monetary policy)."
    },
    {
      "heading": "Policy implications and relevance",
      "content": "- Implication: Monetary and exchange rate policy effectiveness depends on macroeconomic state—higher inflation and elevated uncertainty amplify pass-through to domestic prices.\n- Implication: Global policy spillovers, particularly from U.S. monetary policy, can increase domestic price sensitivity to exchange rate movements.\n- Relevance: Findings are relevant for exchange rate arrangements, inflation targeting, and macroeconomic stabilization strategies in both advanced and emerging market economies."
    },
    {
      "heading": "Publication and metadata",
      "content": "- Authors: Yan Carriere-Swallow, Melih Firat, Davide Furceri, Daniel Jimenez\n- Publication date: April 28, 2023\n- Series: IMF Working Papers, Working Paper No. 2023/086\n- Issue: 086\n- Volume: 2023\n- Pages: 83\n- DOI: https://doi.org/10.5089/9798400240461.001\n- ISBN: 9798400240461\n- ISSN: 1018-5941\n- Subjects: Exchange rate adjustments, Exchange rate arrangements, Exchange rate pass-through, Exchange rates, Foreign exchange, Inflation, Prices\n- Keywords: Exchange rate, Exchange rate adjustments, Exchange rate arrangements, Exchange rate pass-through, Exchange rates, Global, inflation, inflation uncertainty, pass-through, pass-through coefficient, pass-through from the exchange rate, rate of pass-through, rate pass-through, state-dependence\n\nIMF Working Papers — State-Dependent Exchange Rate Pass-Through (April 28, 2023).\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2023/04/28/state-dependent-exchange-rate-pass-through-532680"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2023/04/28/state-dependent-exchange-rate-pass-through-532680/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2023/04/28/state-dependent-exchange-rate-pass-through-532680/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2023/04/28/state-dependent-exchange-rate-pass-through-532680/bundle-manifest.json)",
    "Authors: Yan Carriere-Swallow, Melih Firat, Davide Furceri, Daniel Jimenez",
    "Published: April 28, 2023",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400240461.001",
    "Objective: Estimate how the rate of pass-through from the exchange rate to domestic prices varies across states of the economy and depending on the shocks that drive fluctuations in the exchange rate.",
    "Confirmed results from the literature and uncovered new facts.",
    "Main empirical findings:",
    "Sample and scope: Drawing on the experience of a large sample of advanced and emerging market economies over the past 30 years.",
    "Approach: State-dependent estimation of pass-through to domestic prices.",
    "Novelty: Uses a novel identification strategy to attribute exchange rate fluctuations to U.S. monetary policy and measure differential pass-through associated with that shock.",
    "Focus: Variation of pass-through across macroeconomic states (inflation, uncertainty) and across shock origins (including U.S. monetary policy).",
    "Implication: Monetary and exchange rate policy effectiveness depends on macroeconomic state—higher inflation and elevated uncertainty amplify pass-through to domestic prices.",
    "Implication: Global policy spillovers, particularly from U.S. monetary policy, can increase domestic price sensitivity to exchange rate movements.",
    "Relevance: Findings are relevant for exchange rate arrangements, inflation targeting, and macroeconomic stabilization strategies in both advanced and emerging market economies.",
    "Authors: Yan Carriere-Swallow, Melih Firat, Davide Furceri, Daniel Jimenez",
    "Publication date: April 28, 2023",
    "Series: IMF Working Papers, Working Paper No. 2023/086",
    "Issue: 086",
    "Volume: 2023",
    "Pages: 83",
    "DOI: https://doi.org/10.5089/9798400240461.001",
    "ISBN: 9798400240461",
    "ISSN: 1018-5941",
    "Subjects: Exchange rate adjustments, Exchange rate arrangements, Exchange rate pass-through, Exchange rates, Foreign exchange, Inflation, Prices",
    "Keywords: Exchange rate, Exchange rate adjustments, Exchange rate arrangements, Exchange rate pass-through, Exchange rates, Global, inflation, inflation uncertainty, pass-through, pass-through coefficient, pass-through from the exchange rate, rate of pass-through, rate pass-through, state-dependence",
    "**Working Paper**"
  ],
  "related": [
    {
      "title": "Working Paper",
      "role": "paper",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2023/english/wpiea2023086-print-pdf.pdf",
      "summary": {
        "path": "/-/media/files/publications/wp/2023/english/wpiea2023086-print-pdf.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/wp/2023/english/wpiea2023086-print-pdf.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2023/04/28/state-dependent-exchange-rate-pass-through-532680/index.md",
    "json": "/en/publications/wp/issues/2023/04/28/state-dependent-exchange-rate-pass-through-532680/index.json",
    "bundleManifest": "/en/publications/wp/issues/2023/04/28/state-dependent-exchange-rate-pass-through-532680/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-16T22:30:14.265Z"
}