The impact of the exchange rate on inflation rate in Morocco: empirical investigation (1980-2019)

Abstract

The objective of this paper is to empirically analyze the impact of the exchange rate on inflation in Morocco. The search for competitiveness of the economy at the international level and the maintenance of financial stability are priorities in developing countries.Indeed, the rate of exchange variable has become one of the controversies of monetary policies.  This variable is taken into account in determining the level of inflation. This leads us to treat the notion of ERPT "Exchange-rate pass through" as an indicator of the responsiveness of international prices to changes in exchange rates. Using data covering the period 1980-2019 analyzed with the ARDL model, the estimates showed that the exchange rate exerts a significant negative effect on inflation in Morocco. Thus, the exchange-rate pass through still appears as an important variable of inflation in the long run.