Exchange Rate Pass-Through to CEE Inflation: SVAR Approach
Exchange Rate Pass-Through to CEE Inflation: SVAR Approach

Summary/Abstract: This paper examines exchange rate pass-through (ERPT) to prices in Central and Eastern European (CEE) countries, focusing on the Czech Republic, Poland, Hungary, and Romania. A Structural Vector Autoregression (SVAR) model analyzes the transmission of exchange rate shocks to imported, producer, and consumer prices. Results show significant heterogeneity in ERPT across countries and price stages. Higher pass-through is evident for import prices in all countries, with variations in producer and consumer price responses. Monetary policy credibility and trade openness influence ERPT dynamics. The findings highlight the importance of understanding ERPT for effective monetary policy in the region, emphasizing the complex interplay between exchange rate fluctuations and domestic prices.

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