Title of article
The Impact of Exchange Rate Pass-Through via Domestic Prices on Inflation in Iran: New Evidence from a Threshold Regression Analysis
Author/Authors
Abdi Seyyedkolaee, Mohammad University of Mazandaran, Babolsar, Iran , Tehranchian, Amir Mansour Department of Economics - University of Mazandaran , Jafari Samimi, Ahmad Department of Economics - University of Mazandaran, Iran , Mojaverian, Mojtaba Department of Agricultural Economics - Sari University of Agricultural Sciences and Natural Resources, iran
Pages
20
From page
77
To page
96
Abstract
There are various causes for inflation in macroeconomics. One of the important channels of experiencing inflation is through the international economy caused by external shocks. In this context, the impact of exchange rate volatilities on domestic prices known as Exchange Rate Pass-Through (ERPT) plays a vital role.
The present paper deals with the impact of Exchange Rate Pass-Through on inflation in Iran. To do so, using a monthly time series data for the period 1983: 1-2014: 9, a Threshold Regression has been applied to estimate the relevant model. The results indicate a growth rate of monthly nominal exchange rate of 9.1 percent acts as a threshold rate. In other words, ERPT to domestic prices above the threshold is statistically significant whereas below the threshold, is not statistically significant.
Therefore, due to the fact that one of the main functions of the central bank is to maintain a stable currency value it is very important to pay attention to the impact of Exchange Rate Pass-Through and its threshold effects in implementation monetary policies to curb inflation.
Keywords
Exchange Rate Pass-Through , Economy of Iran , Threshold Regression , Inflation rate
Journal title
International Journal of Business and Development Studies
Serial Year
2016
Record number
2508488
Link To Document