RBI paper finds complexity in exchange rate pass-through
Authors challenge standard view that exchange rates have a “linear and symmetric” impact
The exchange rate’s impact on prices in India is non-linear and varies over time, according to research published by the Reserve Bank of India.
“In contrast to the relative neglect in the standard literature, recent studies are putting out persuasive evidence that non-linearities cannot be neglected,” write authors Michael Debabrata Patra, Jeevan Kumar Khundrakpam and Joice John in the working paper. They add to this literature by estimating how the exchange rate affects the consumer price
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