Response of Domestic Prices to Exchange Rate Movements in Argentina
Abstract
Based on an extended IS-LM-AS model, this study finds that if the Argentine peso depreciates 1% versus the U.S. dollar, the consumer price in Argentina would increase by 0.2518%. In addition, more structural fiscal deficit as a percent of potential GDP, more M2 supply, a higher U.S. price level, and a higher expected price level would raise Argentina’s consumer price level. Therefore, partial exchange rate pass-through is confirmed for Argentina.
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PDFDOI: https://doi.org/10.5296/ber.v11i2.18604
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