Analysis of Nominal Exchange Rate Pass-Through Effect on Inflation Rate in Selected Countries

Original scientific paper
Author: Aleksandra Živković, Ivan Milenković, PhD
doi: 10.5937/bankarstvo2103008Z
Keywords: exchange rate pass-through; exchange rate; inflation rate
JEL: E42, E52, E58, C33

SCINDEX

Summary: Inflation rate is one of the essential macroeconomics variables and it represents the main goal of monetary policy. It is determined by a great number of factors, so it is necessary to analyse the impact their changes have on inflation rate. The purpose of this research is the analysis of the nominal exchange rate pass-through effect on inflation rate in selected emerging and developed countries in the period 2014-2020, which share the same characteristics of inflation targeting, as main monetary policy regime, and managed floating exchange rate, as exchange rate type. Inverse proportion between volatility of nominal exchange rate and inflation rate is proven (depreciation of nominal exchange rate of national currency leads towards the growth of inflation rate), as well as higher pass-through effect in emerging countries compared to developed countries.

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