Exchange-rate pass-through

Exchange-rate pass-through (ERPT) is a measure of how responsive international prices are to changes in exchange rates. Exchange-rate pass-through (ERPT) is a measure of how responsive international prices are to changes in exchange rates. Formally, exchange-rate pass-through is the elasticity of local-currency import prices with respect to the local-currency price of foreign currency, often measured as the percentage change, in the local currency, of import prices resulting from a one percent change in the exchange rate between the exporting and importing countries. A change in import prices affects retail and consumer prices. When exchange-rate pass-through is greater, there is more transmission of inflation between countries. Exchange-rate pass-through is also related to the law of one price and purchasing power parity.