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Pass-Through of External Shocks to Inflation in Sri Lanka, Nombulelo Braiton

This paper investigates pass-through of external shocks (exchange rate, oil price, and import price shocks) to inflation in Sri Lanka. The analysis is based on a vector autoregression (VAR) model that incorporates a distribution chain of pricing. The paper finds low and incomplete pass-through of external shocks to consumer inflation, reflecting a combination of factors including the existence of administered prices, high content of food in the consumption basket, and low persistence and volatility of the exchange rate. External shocks explain about 25 percent of the variation in consumer price inflation, reflecting room for domestic policies in controlling inflation
Table Of Contents
Contents; I. Introduction; II. Literature Review; III. Inflation and the Exchange Rate in Sri Lanka; Figures; 1. Headline Inflation in Selected Asian Countries; 2. Exchange Rates and Prices; IV. A Model of Pass-Through and Methodology; A. Data Issues and Transformation of Variables; B. VAR Model Specification; Tables; 1. Unit Root Tests; 2. VAR Lag Length Selection Criteria; 3. VAR Lag Exclusion Wald Tests; 4. VAR Residual Serial Correlation LM Tests; C. VAR Model Results and analysis; D. Sensitivity Analysis and Alternative Specifications; V. Conclusion; Appendices; I. VAR Residuals
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (28 p.)
Specific Material Designation
Form Of Item

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