Anil Lama , Birendra Bahadur Budha , K.P. Prabhesh , Sona Rana
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Abstract
This paper estimates the exchange rate pass-through in Nepal using Local Projections based on monthly data for the period from March 1993 to October 2023. The paper finds a significant exchange rate pass-through to consumer prices for up to 12 months. Moreover, the pass-through is significant during the depreciation of the exchange rate but not during appreciation periods, indicating the asymmetric effect of exchange rate changes. Additionally, exchange rate pass-through has significantly declined after the formal announcement of Nepalese monetary policy in 2003 and the global financial crisis in 2007. The presence of a significant pass-through, given the peg with the Indian Rupee and high trade integration with India, suggests that it is important for the central bank to consider this pass-through while making monetary policy decisions.
期刊介绍：
The Journal of Asian Economics provides a forum for publication of increasingly growing research in Asian economic studies and a unique forum for continental Asian economic studies with focus on (i) special studies in adaptive innovation paradigms in Asian economic regimes, (ii) studies relative to unique dimensions of Asian economic development paradigm, as they are investigated by researchers, (iii) comparative studies of development paradigms in other developing continents, Latin America and Africa, (iv) the emerging new pattern of comparative advantages between Asian countries and the United States and North America.
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