Conditional Exchange Rate Pass-Through: A DSGE Model Approach

Mariano Palleja

2017-12-14 - Due to the potential existence of an endogeneity issue, assessing exchange rate pass-through as a non conditional phenomenon can lead to misleading conclusions. In this regard, this paper estimates for two economies a dynamic stochastic general equilibrium model, aiming to analyze to what extent their coefficients of passthrough, which are a priori significantly different, are either driven by structural discrepancies or by differences in the shocks each economy faces. Evidence suggests that the later effect predominates.