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Impact of exchange rate changes on domestic inflation: a study of a small Pacific Island economy

Jayaraman, Tiruvalangadu K. and Choong, C.K. (2011) Impact of exchange rate changes on domestic inflation: a study of a small Pacific Island economy. UNSPECIFIED.

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    Abstract

    This paper investigates the effect of changes in exchange rate on consumer price level, in Fiji, known as exchange rate pass-through during a thirty year period (1982-2009). Specifically, three time periods are focused on: the pre-coup years (1982-1986); post coup years (1987-2009); and full time period (1982-2009). Monthly data on consumer price index, nominal exchange rate, monetary aggregate and interest rate are utilized. The study results show that the degree of exchange rate pass-through to domestic price was relatively low during the entire sample period at 0.183. It was 0.453 and 0.373 for the pre and post coups periods. Regardless of the sample periods under study, the monetary aggregate, as a variable plays a pivotal in stabilizing the price level.

    Item Type: Other
    Additional Information: MPRA Paper No.33719.
    Subjects: H Social Sciences > HG Finance
    Divisions: Faculty of Business and Economics (FBE) > School of Economics
    Depositing User: Ms Shalni Sanjana
    Date Deposited: 25 Jun 2011 19:53
    Last Modified: 27 Jun 2012 19:10
    URI: http://repository.usp.ac.fj/id/eprint/4758
    UNSPECIFIED

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