Exchange Rate Pass-Through to Domestic Prices: Evidence Analysis of a Periphery Country

This study aims to examine the context in which the exchange-rate pass-through influences domestic prices in Tunisia by applying vector error correction models. To ensure the robustness of the results obtained from the autoregressive model, additional diagnostic tests were performed. Our analysis indicates that fluctuations in the nominal effective exchange rate (NEER) have an enduring impact on customer prices. This research aims to review how the fluctuations in exchange rates and import prices can impact domestic prices in Tunisia. Our findings demonstrate that NEER fluctuations affect consumer prices in both the short and long term, highlighting its significant role in long-term inflation.