Exchange Rate Pass Through to Domestic Prices: Evidence from Mauritius

Abstract

The study investigates the extent and degree of exchange rate pass through to prices at different distribution levels, namely from import prices, to producer up to consumer prices, for the small island economy of Mauritius which is highly dependent on external markets. Using data from 1999 to 2010 and a Structural Vector Autoregressive (SVAR) model, we also focus on the existence and degree of causality between exchange rate and domestic prices.