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Can exchange rate pass-through explain the price puzzle?
Journal article   Open access   Peer reviewed

Can exchange rate pass-through explain the price puzzle?

Syed Zahid Ali and Sajid Anwar
Economics Letters, Vol.145, pp.56-59
2016
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Accepted VersionPDF - Author Accepted Version (Open Access)CC BY-NC-ND V4.0 Open Access
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https://doi.org/10.1016/j.econlet.2016.05.023View
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Abstract

price puzzle cost channel exchange rate pass-through rational expectations
The anomalous behavior of inflation in response to contractionary monetary policy is known as the price puzzle. Using a simple open-economy macroeconomic model, with expectations formed rationally, we show that exchange rate pass-through can help in resolving the price puzzle.

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