An Empirical Assessment of the Exchange Rate Pass-through in Mozambique
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Summary:
Determining the magnitude and speed of the exchange rate passthrough (ERPT) to inflation has been of paramount importance for policy-makers in developed and emerging economies. This paper estimates the exchange rate passthrough in Mozambique using econometric techniques on a sample spanning from 2001 to 2019. Results suggest that the ERPT is assymetric, sizable and fast, with 50 percent of the exchange rate variations passing through to prices in less than six months. Policy-makers should continue to pursue low and stable inflation and develop a strong track record of prudent macroeconomic policies for the ERPT to decline.
Series:
Working Paper No. 2021/132
Subject:
Exchange rate pass-through Exchange rates Foreign exchange Inflation Monetary policy Monetary policy frameworks Nominal effective exchange rate Prices
Frequency:
regular
English
Publication Date:
May 6, 2021
ISBN/ISSN:
9781513573694/1018-5941
Stock No:
WPIEA2021132
Pages:
34
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