An Empirical Assessment of the Exchange Rate Pass-through in Mozambique

Author: Aisen Ari, Manguinhane Edson, and Simione Felix F

Volume/Issue: Volume 2021 Issue 132

Publication date: May 2021

ISBN: 9781513573694

$18.00

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Topics covered in this book

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Inflation , Economics- Macroeconomics , Money and Monetary Policy , Economics / General , International - Economics , inflation environment , Philips-perron unit root test , long-run ERPT elasticity , CPI response , speed of the exchange rate passthrough , Exchange rate pass-through , Exchange rates , Inflation , Monetary policy frameworks , Nominal effective exchange rate , Global , Africa , Sub-Saharan Africa

Also of interest

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WORKING PAPERS PUBLISHED IN SEPTEMBER 2003

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.