A Simultaneous-Equation Model of Estimating Exchange Rate Pass-Through in Malaysia
Published: 29 August 2020
Quantitative Economics and Management Studies , Volume 1, pp 181-186; doi:10.35877/454ri.qems193
Abstract: Based on an extended IS-LM-AS model, this study finds that a 1% depreciation of the Malaysian ringgit tends to cause the CPI to rise by 0.1194%. Moreover, more M2 money supply, a lower government borrowing as a percent of GDP, a higher crude oil price, a higher U.S. CPI, and a higher expected consumer price index tend to raise Malaysia’s CPI. Therefore, exchange rate pass-through (ERPT) to the consumer price in Malaysia is partial and incomplete.
Keywords: Malaysia / model / GDP / Partial / Simultaneous / Exchange Rate Pass
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