Exchange Rate Pass Through: The Case of The Gambia

Exchange Rate Pass Through: The Case of The Gambia

International Review of Business Research Papers

Vol. 13. No. 1., March 2017, Pages: 104 – 118

Exchange Rate Pass Through: The Case of The Gambia

Sheriff Touray, Momodou K. Dibba and Momodou O. Jallow

This paper used unrestricted Vector autoregression model to study the exchange rate pass-through to consumer prices in the Gambia. We found that exchange rate pass through is not complete, consistent with other studies on sub-Saharan Africa. Exchange rate depreciation (positive exchange rate shock) results in an increase in domestic prices by 0.2 percentage points in the second quarter. The effect of the shock on CPI peaks at about 0.4 percentage points at the end of the fourth quarter. Furthermore, we also found a declining pass-through consistent with other studies. For robustness, we employed the ARDL method just to ensure that the results are not dictated by the choice of methodology.

DOI : https://doi.org/10.21102/irbrp.2017.03.131.08