Browsing by Subject "Tajikistan"

Exchange rate pass-through (ERPT) is the measure of the responsiveness of consumer prices to the exchange rate fluctuations of a domestic currency against foreign ones. Changes in the exchange rate affect the prices of imported goods and the domestically produced ones that use the imported intermediary goods. Thus, this concept is important to those nations that heavily rely on imports, such as Tajikistan, which has a small open economy. In this paper, the structural vector autoregression (SVAR) model with Cholesky decomposition is employed. To test the robustness of the findings, along with the aforementioned identification method, independent component analysis via distance covariance (ICA via DC) statistic is utilized, too. Thus, it has been estimated that during the period between 2001 and 2022, a 1% depreciation of somoni, the national currency of Tajikistan, against the US dollar results in 0.084%, 0.157%, and around 0.18% increase in consumer prices in a month, 3 months, and year, respectively. Nevertheless, the SVAR model with ICA via DC statistic yielded a higher pass-through rate, as at the same time periods the consumer prices increase by 0.12%, 0.21%, and 0.24%. The findings suggest that Tajikistan exhibits a moderate ERPT to consumer prices which could be explained by the fact that almost 70% of the consumer basket is comprised of foodstuffs. As global food prices also influence local food costs, they sometimes counterbalance the effects of exchange rate fluctuations on the inflation levels. Moreover, it has been found that the prices of some groups of goods, such as construction materials, medicines, foodstuffs, and furniture, are more susceptible to exchange rate fluctuations as their magnitude of ERPT equalled 0.41%, 0.37%, 0.25%, and 0.16% in a year, respectively, when Cholesky decomposition was utilized.