Evaluation of Pass-Through Effect of the Exchange Rate to Inflation
Keywords:Monetary policy– Inflation- Exchange rate – Central ban
Monetary policy has a significant impact on economic growth. Exchange rate changes have a strong effect on relative prices of goods and services. The importance of the influence of the exchange rate on inflation can't be overstated and that is causes the monetary authorities to monitor the behavior of both nominal and real exchange rates to take an active interest in determining the behavior of the exchange rate. One of the key dilemmas of modern monetary policy is the issue of currency regulation. The performed analysis will show whether there is a correlation between exchange rate and inflation and will also identify the extent of this dependence in both developed and developing countries.
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