ECB paper examines exchange rates and household consumption

Exchange rate elasticity of household consumption driven largely by industrial goods - researchers

Euro sign, Frankfurt
The European Central Bank headquarters in Frankfurt

A working paper published by the European Central Bank analyses the elasticity of the household consumption expenditure deflator to countries’ exchange rates.

In Estimating the elasticity of consumer prices to the exchange rate: an accounting approach, Hadrien Camatte et al use data from world input-output tables from 1995 to 2019. The authors say their results are robust using four different WIOT datasets.  

They find that there is an average output-weighted elasticity of around 0.1, which

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