Central banks are using biased estimates of pass-through – BIS paper

The Bank for International Settlements, Basel
The Bank for International Settlements, Basel
Photo: Ulrich Roth

Central banks’ estimates of the pass-through of exchange rates to retail prices are probably biased, research published by the Bank for International Settlements finds.

In the working paper, Fernando Pérez-Cervantes studies micro-data on the pricing patterns of various Mexican retailers. He finds that different types of shop charge different prices for the same goods within the same city, and that different shops pass through exchange rate changes to different degrees.

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