Original Research

Exchange rate pass-through to domestic prices in Namibia: SVAR evidence

Johannes Sheefeni, Matthew Ocran
Journal of Economic and Financial Sciences | Vol 7, No 1 | a132 | DOI: https://doi.org/10.4102/jef.v7i1.132 | © 2019 Johannes Sheefeni, Matthew Ocran | This work is licensed under CC Attribution 4.0
Submitted: 22 December 2017 | Published: 30 April 2014

About the author(s)

Johannes Sheefeni, Department of Economics, Nelson Mandela Metropolitan University, South Africa
Matthew Ocran, Department of Economics, Nelson Mandela Metropolitan University, South Africa

Full Text:

PDF (358KB)

Abstract

This article investigates exchange rate pass-through to domestic prices in Namibia. The study covers the period of 1993:Q1 – 2011:Q4, and employed the impulse response functions and variance decompositions obtained from a structural vector autoregressive model. The results from the impulse response functions show that there is a high and long-lasting effect from changes in exchange rates to inflation in Namibia, or high exchange rate pass-through into domestic inflation. The results from the forecast error variance decompositions also reflect that changes in the price level evolve endogenously with changes in the exchange rate. The results are in agreement with the findings of the impulse response functions regarding the significant effect of the exchange rate variable on domestic prices (inflation). The results confirm an incomplete pass-through, indicating that the purchasing power parity theory does not hold, with regard to the price level, in the context of Namibia.

Keywords

exchange rate; short-run; pass-through; inflation; structural vector autoregressive; impulse response; Namibia

Metrics

Total abstract views: 2117
Total article views: 845

 

Crossref Citations

1. An investigation of the impact of exchange rate movements on consumer prices in the Southern African Customs Union (SACU)
Teboho Mashao, Ireen Choga
Cogent Business & Management  vol: 10  issue: 2  year: 2023  
doi: 10.1080/23311975.2023.2244766