There are very few studies on ERPT for Pakistan (see Appendix Table 1).
The study contributes to the existing literature for Pakistan by, (a) developing a model to estimate ERPT while taking into account the existing level of RERM; (b) estimating the short-run and long- run ERPT for Pakistan; (c) providing implications for appropriate monetary and exchange rate policies.
In this study, the typical ERPT model specification approach is employed as a starting point.
Previous studies on ERPT into import prices have employed import price equations derived within the mark-up framework [see, Menon (1995) and Goldberg and Knetter (1997)].
Typically, ERPT to domestic prices are higher in emerging market economies than their developed counterparts: These economies are highly dependent on imported intermediate goods in the production process, either in the form of raw materials or capital goods.
2) Ho and McCauley (2003) state that episodes of rapid and large devaluation/depreciation and consequent high inflation may lead to the use of foreign currency in transactions and financial contracts, which could increase the degree of ERPT beyond the levels implied by the cost channel.
The fact that depreciation can be followed by a subsequent appreciation affects expectations about the persistence of exchange rate movements--the perceptions of the price setters regarding the future marginal costs--and thereby the ERPT to prices.
Like previous studies, this study finds a generalized downward trend in ERPT elasticities for the main import categories.
The economic literature generally supports the partial ERPT hypothesis that only a portion of exchange rate movements will translate into import price changes.
The paper reports a substantial degree of variation in ERPT across groups and finds no asymmetric response to appreciations and depreciations.
The ERPTS incorporates several business and financial competencies, including analytical skills, communication, financial management, and leadership.
While the Department of Defense uses virtual worlds for training tactical operations, as well as business skill development, the ERPTS marks the first use of this technology for learning financial management.