An Empirical Invistigation of the Exchange Rate Pass-through to Prices in Morocco
In this paper, we use Structural Vector Autoregressive model to evaluate the degree of exchanges rate pass-through to domestic prices. Our results suggest that the responsiveness of the later is low overall, decreases over time and it is higher for tradable than non-tradable goods. The low inflation environment, the modernization of the monetary policy framework and the country’s import structure are the main factors explaining these results. This would facilitate the implementation of a more flexible exchange rate regime and explicit long-run inflation objective in Morocco.
