Constraints on exchange rate flexibility in transition economies: a meta-regression analysis of exchange rate pass-through
Abstract:This article uses Meta-Regression Analysis (MRA) to investigate exchange rate pass-through to domestic prices, highlighting differences between transition and developed economies. A total of 23 studies yielded 575 coefficients measuring exchange rate pass-through to import prices and consumer prices for 23 developed and 12 transition economies. The MRA results confirm the finding of many particular analyses that exchange rate pass-through is less than complete. In addition, exchange rate pass-through is higher to import prices than to consumer prices; and exchange rate pass-through is higher in the long run than in the short run. Regarding transition and developed economies, MRA suggests that there is no statistically significant difference in exchange rate pass-through to import prices. Yet, exchange rate pass-through to consumer prices is significantly and substantially higher in transition than in developed economies. This finding is consistent with the caution of many monetary authorities in transition economies regarding exchange rate flexibility.
Document Type: Research Article
Affiliations: 1: National Bank of the Republic of Macedonia, SkopjeMacedonia, The Former Yugoslav Republic of Macedonia 2: Department of Economics,Business School, Staffordshire University, Stoke-on-Trent, UK
Publication date: November 1, 2011