This paper examines the presence of asymmetric behavior in exchange rate pass-through (ERPT) to CPI inflation in 12 … euro area (EA) countries. Using a class of nonlinear smooth transition models, we test for asymmetry with respect to the … direction of asymmetry. On the other hand, we report strong evidence that ERPT responds asymmetrically to the size of exchange …

This paper examines the presence of asymmetric behavior in exchange rate pass-through (ERPT) to CPI inflation in 12 … euro area (EA) countries. Using a class of nonlinear smooth transition models, the author tests for asymmetry with respect … with no clear evidence about the direction of asymmetry. On the other hand, the author reports strong evidence that ERPT …

movements do not have an impact on inflation, as aggregate rules of thumb mask substantial heterogeneities across countries … deviations of inflation from target, including those relating to exchange rate fluctuations. Moreover, under the effective lower … inflation. …