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2019 | OriginalPaper | Buchkapitel

16. Does Trade Openness or Globalisation Matter for the Response of Inflation to Exchange Rate Depreciation Shocks?

verfasst von : Dr. Eliphas Ndou, Nombulelo Gumata, Dr. Mthokozisi Mncedisi Tshuma

Erschienen in: Exchange Rate, Second Round Effects and Inflation Processes

Verlag: Springer International Publishing

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Abstract

We find a negative relationship between trade openness, inflation and the exchange rate pass-through (ERPT) to inflation. Positive shocks to the trade openness lower the ERPT, and the decline is much bigger due to a persistent shock compared to a non-persistent shock. This indicates the direct effects of trade openness on ERPT. The counterfactual analysis reveals that increased trade openness dampens the increase in inflation due to exchange rate depreciation shocks. The negative business confidence channel and subdued GDP growth post 2008Q4, amplified the dampening ability of positive shocks to trade-openness to lower the ERPT.

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Titel: Does Trade Openness or Globalisation Matter for the Response of Inflation to Exchange Rate Depreciation Shocks?
verfasst von: Dr. Eliphas Ndou
Nombulelo Gumata
Dr. Mthokozisi Mncedisi Tshuma
Verlag: Springer International Publishing
Buch: Exchange Rate, Second Round Effects and Inflation Processes
Print ISBN: 978-3-030-13931-5

Electronic ISBN: 978-3-030-13932-2

Copyright-Jahr: 2019
DOI: https://doi.org/10.1007/978-3-030-13932-2_16