Monetary policy shocks drive higher exchange rate pass-through, impacting global prices.
The study looked at how changes in exchange rates affect prices in different countries. They found that when a country's currency moves because of changes in its monetary policy, prices tend to go up more compared to other types of changes. Countries with flexible exchange rates and clear inflation goals have lower price increases when their currency changes. This suggests that how prices react to exchange rate changes depends on the reason behind the currency movement and the country's economic policies.