This paper examines the degree of Exchange Rate Pass-Through (ERPT) to prices in 6 emerging markets that adopt inflation targeting (IT) framework in Latin America and Asia. To achieve this, we employ a modeling strategy that examines the short-run and the long-run fluctuations of the exchange rates pass-through into prices over the period from 1990:Q1-2012:Q4. The paper also finds robust evidence for a positive relationship between the degree of the ERPT and inflation. We conducted a comparative study between countries with hyperinflation and countries with moderate inflation. Estimations results confirm the presence of a positive link between prices and ERPT in emerging markets adopting inflation targeting strategy, while plausible theoretically, finds only weak empirical support in the absence of implemented of inflation targeting regime. The results show that ERPT has declined after IT framework.
Show abstract
Full Text
