LAUSR

We analyze the channels through which the exchange rate af- fects nal consumer prices. We compare advanced countries with one emerging economy, Brazil, to determine the corresponding ex- change rate pass-through and its channels. A key aspect to the exchange rate pass-through is the relative importance of tradables in the consumption basket as well as the share of imported inputs. Since non-tradables are usually cheaper in developing economies, the share of non-tradeables is smaller in theses countries. We il- lustrate this scenario using data from Brazil vis-a-vis a group of advanced economies.