Exchange rate pass-through and inflation targets in Chile
Using quarterly data on the Chilean economy from 1986 to 2009, this article looks at the effect of gradual implementation of an inflation-targeting regime on exchange rate pass-through to prices. Initially, the introduction of inflation-targeting contributes to substantial reductions in the pass-thr...
Saved in:
| Main Authors: | , |
|---|---|
| Format: | Texto |
| Language: | English |
| Published: |
2016
|
| Subjects: | |
| Online Access: | http://hdl.handle.net/11362/40068 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | Using quarterly data on the Chilean economy from 1986 to 2009, this article looks at the effect of gradual implementation of an inflation-targeting regime on exchange rate pass-through to prices. Initially, the introduction of inflation-targeting contributes to substantial reductions in the pass-through coefficient. However, in the second phase of implementation, once the monetary authority extends the policy horizon and introduces greater flexibility into the exchange rate system, the pass-through coefficient rises sharply. The findings of this study show that exchange rate pass-through to prices, in addition to being sensitive to the inflationary environment, is closely tied to the rules of the game that shape the monetary policy framework. |
|---|