Exchange rate pass-through and inflation targeting in Peru

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13 Citas (Scopus)


It has been widely documented that the exchange rate pass-through to domestic inflation has decreased significantly in most of the industrialized world. As microeconomic factors cannot completely explain such a widespread phenomenon, a macroeconomic explanation linked to the inflationary environment-that a low and more stable inflation rate leads to a decrease in the pass-through-has gained popularity. Using a structural VAR framework, this paper presents evidence of a similar decline in the pass-through in Peru, a small open economy that gradually reduced inflation to international levels in order to adopt a fully fledged inflation targeting scheme in 2002. It is argued that the establishment of a credible regime of low inflation has been instrumental in driving the exchange rate pass-through down.
Idioma originalInglés
Páginas (desde-hasta)1181-1196
Número de páginas16
PublicaciónEmpirical Economics
EstadoPublicada - 1 ene. 2014
Publicado de forma externa

Palabras clave

  • Exchange rate pass-through
  • Inflation targeting
  • Structural VAR


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