Effects of exchange rate pass-through on inflation in Vietnam

The main purpose of this study is to investigate the effect of exchange rate pass-through (ERPT) on domestic price of goods and services in Vietnam under the impact of the interest rate and refinancing rate over the period 2014 to 2019. Unit root test and many Diagnostic tests are conducted before applying the Vector Auto Regressive (VAR) model. Estimation results indicate that exchange rate changes have a positive impact on domestic consumer price level means that an increase in the depreciation of Vietnam dong could cause an increase in domestic price, the degree of ERPT into domestic price level is smaller than interest rate and refinancing one. The study also indicates many problems existing in the actual situation in Vietnam. From those analysis results, the study has proposed monetary policy orientations to help stabilize prices and develop macroeconomics.