Learning to Adjust: The Effects of Currency Depreciations on Inflation in Latin America

2019-03-27T09:42:01-04:00May 11, 2016|

By Yan Carrière-Swallow and Bertrand Gruss

(Versions in Español and Português)

Falling global commodity prices and the normalization of monetary policy in the United States have contributed to widespread currency depreciations in Latin America. In theory, a falling currency is expected to create inflation by driving up the price of imported goods and services—triggering what economists call exchange rate pass-through.