Exchange Rate Pass Through to Prices in Maldives

27 Pages Posted: 9 Aug 2012

See all articles by Iyabo Masha

Iyabo Masha

International Monetary Fund (IMF)

Chanho Park

Bank of Korea-International Department

Date Written: May 2012

Abstract

This study examines the degree of exchange rate pass through (EPRT) into producer and consumer prices in Maldives. ERPT to consumer prices is first estimated using a nonparametric approach. A recursive vector autoregression is then used to model both consumer and producer price changes. The nonparametric estimation indicates that ERPT to consumer prices is very high, both in absolute terms and relative to other countries. The dynamics of ERPT as derived from the empirical estimation indicate that ERPT to consumer and producer prices is significant but not complete, and that the impact of exchange rate changes persists into the second year.

Keywords: Exchange Rate

JEL Classification: C32, E31, F31, O53

Suggested Citation

Masha, Iyabo and Park, Chanho, Exchange Rate Pass Through to Prices in Maldives (May 2012). IMF Working Paper No. 12/126. Available at SSRN: https://ssrn.com/abstract=2127021

Iyabo Masha (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Chanho Park

Bank of Korea-International Department ( email )

39, Namdaemun-ro, Jung-gu
Seoul, 04531
Korea, Republic of (South Korea)

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