ABSTRACT
The exchange rate is one of the main prices of the economy. Its fluctuations have important impacts on domestic prices and therefore on the conduct and credibility of monetary policy. This paper presents a broad review of the literature on the exchange rate pass-through and it gives a contribution in the sense to organize the debate on the subject, which is of special interest to the understanding of Brazil's inflationary process. It has been identified that the phenomenon of exchange rate pass-through may vary among groups of countries as a result of a hierarchy within the international monetary system, a fact that is not explicitly addressed in the specialized literature. The paper also includes empirical studies on exchange rate pass-through in Brazil. It concludes that the macro and microeconomic determinants of exchange rate transfers are part of a whole that needs to be understood at the level of firms to better explain the aggregate behavior of prices.
KEYWORDS:
pass-through; inflationary environment; sectorial heterogeneity in the pass-through; pass-through asymmetry; money hierarchy