The Exchange Rate Pass -Through to Import and Export Prices PDF Download
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Author: Ehsan U. Choudhri
Publisher: International Monetary Fund
ISBN: 1475510233
Category : Business & Economics
Languages : en
Pages : 34
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Book Description
Using both regression- and VAR-based estimates, the paper finds that the exchange rate pass-through to import prices for a large number of countries is incomplete and larger than the pass-through to export prices. Previous studies have reported similar results, which give rise to the puzzle that while local currency pricing is needed to account for incomplete import price pass-through, it would not imply a lower export price pass-through. Recent explanations of this puzzle have emphasized markup adjustment in response to exchange rate changes. This paper suggests an alternative explanation based on the presence of both producer and local currency pricing. Using a dynamic general equilibrium model, the paper shows that a mix of producer and local currency pricing can explain the pass-through evidence even with a constant markup. The model can also explain the observed exchange rate and inflation variability as well as the fact that the regression and VAR estimates tend to be similar.
Author: Ehsan U. Choudhri
Publisher: International Monetary Fund
ISBN: 1475510233
Category : Business & Economics
Languages : en
Pages : 34
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Book Description
Using both regression- and VAR-based estimates, the paper finds that the exchange rate pass-through to import prices for a large number of countries is incomplete and larger than the pass-through to export prices. Previous studies have reported similar results, which give rise to the puzzle that while local currency pricing is needed to account for incomplete import price pass-through, it would not imply a lower export price pass-through. Recent explanations of this puzzle have emphasized markup adjustment in response to exchange rate changes. This paper suggests an alternative explanation based on the presence of both producer and local currency pricing. Using a dynamic general equilibrium model, the paper shows that a mix of producer and local currency pricing can explain the pass-through evidence even with a constant markup. The model can also explain the observed exchange rate and inflation variability as well as the fact that the regression and VAR estimates tend to be similar.
Author: William R. Smith
Publisher: Routledge
ISBN: 135175131X
Category : Business & Economics
Languages : en
Pages : 212
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Book Description
Originally published in 1996. This study looks at the impact of exchange rate fluctuation on the pricing practices of foreign industries that import into the United States market. It presents several studies of the pass-through behaviour of over 100 disaggregated commodity groups with bi-lateral exchange rates. The book presents analysis of specific competitors and their individual pricing responses to exchange rate changes, adding significantly to pricing theory as well as being useful for marketers in predicting business responses.
Author: Holger Brauer
Publisher: Springer Science & Business Media
ISBN: 9783540004301
Category : Foreign exchange rates
Languages : en
Pages : 250
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Book Description
Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1513573691
Category : Business & Economics
Languages : en
Pages : 34
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Book Description
Determining the magnitude and speed of the exchange rate passthrough (ERPT) to inflation has been of paramount importance for policy-makers in developed and emerging economies. This paper estimates the exchange rate passthrough in Mozambique using econometric techniques on a sample spanning from 2001 to 2019. Results suggest that the ERPT is assymetric, sizable and fast, with 50 percent of the exchange rate variations passing through to prices in less than six months. Policy-makers should continue to pursue low and stable inflation and develop a strong track record of prudent macroeconomic policies for the ERPT to decline.
Author: Jaehwa Lee
Publisher:
ISBN:
Category :
Languages : en
Pages : 31
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Book Description
This study empirically examines the nature of the exchange rate-pass through (ERPT) into export and import prices in the case of a small open economy of Korea by using a bounds testing approach. The estimation results obtained from the unrestricted error correction model (UECM) using data on Korea and its major trading partners, Japan and the U.S., provide new evidences showing that statistical significances in the degree of pass-through vary with respect to industries. The study also reveals that there is heterogeneity across sectors in their reaction to exchange rate as well as its asymmetry and persistence. The evidence indicate that the raw materials sector has a difference in the ERPT between the short and the long run effects, suggesting that the incomplete exchange rate pass-through seems to be persistent within the sector. In particular, the evidence for agriculture does support the hypothesis of asymmetric response to the ERPT in the long run. This result supports that of previous findings, but also provides more insight for the exchange rate theory and trade policy.
Author: Ramkishen S. Rajan
Publisher: Springer
ISBN: 1137534141
Category : Political Science
Languages : en
Pages : 226
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Book Description
While offering many growth-enhancing opportunities, India's ever-increasing integration with the world economy has given rise to a host of new challenges in managing the economy. This book provides an up-to-date empirical assessment of some of India's crucial policy challenges pertaining to its monetary and external sector management.
Author: Natalie Chen
Publisher: International Monetary Fund
ISBN: 1475526431
Category : Business & Economics
Languages : en
Pages : 58
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Book Description
This paper investigates theoretically and empirically the heterogeneous response of exporters to real exchange rate fluctuations due to product quality. Our model shows that the elasticity of demand perceived by exporters decreases with a real depreciation and with quality, leading to more pricing-to-market and to a smaller response of export volumes to a real depreciation for higher quality goods. We test the proposed theory using a highly disaggregated Argentinean firm-level wine export dataset between 2002 and 2009 combined with experts wine rankings as a measure of quality. The model predictions find strong support in the data and the results are robust to different measures of quality, samples, specifications, and to the potential endogeneity of quality.
Author: José Manuel Campa
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 52
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Book Description
Exchange rate regime optimality, as well as monetary policy effectiveness, depends on the tightness of the link between exchange rate movements and import prices. Recent debates hinge on whether producer-currency-pricing (PCP) or local currency pricing (LCP) of imports is more prevalent, and on whether exchange rate pass-through rates are endogenous to a country's macroeconomic conditions. We provide cross-country and time series evidence on both of these issues for the imports of twenty-five OECD countries. Across the OECD and especially within manufacturing industries, there is compelling evidence of partial pass-through in the short-run- rejecting both PCP and LCP. Over the long run, PCP is more prevalent for many types of imported goods. Higher inflation and exchange rate volatility are weakly associated with higher pass-through of exchange rates into import prices. However, for OECD countries, the most important determinants of changes in pass-through over time are microeconomic and relate to the industry composition of a country's import bundle.
Author:
Publisher:
ISBN:
Category : Exchange rate pass-through
Languages : en
Pages :
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Book Description
"A growing body of empirical work has found evidence of a decline in exchange rate pass-through to import prices in a number of industrial countries. Our paper complements this work by examining pass-through from the other side of the transaction; that is, we assess the exchange rate sensitivity of export prices (denominated in the exporter's currency). We first sketch out a streamlined analytical model that highlights some key factors that determine pass-through. Using this model as reference, we find that the prices charged on exports to the United States are more responsive to the exchange rate than is the case for export prices to other destinations, which is consistent with results in the literature suggesting that import price pass-through in the U.S. market is relatively low. We also find that moves in the exchange rate sensitivity of export prices over time have been significantly affected by country and region-specific factors, including the Asian financial crisis (for emerging Asia), deepening integration with the United States (for Canada), and the effects of the 1992 ERM crisis (for the United Kingdom)"--Federal Reserve Board web site.
Author: Robert J. Vigfusson
Publisher:
ISBN:
Category :
Languages : en
Pages : 47
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Book Description
A growing body of empirical work has found evidence of a decline in exchange rate pass-through to import prices in a number of industrial countries. Our paper complements this work by examining pass-through from the other side of the transaction; that is, we assess the exchange rate sensitivity of export prices (denominated in the exporter's currency). We first sketch out a streamlined analytical model that highlights some key factors that determine pass-through. Using this model as reference, we find that the prices charged on exports to the United States are more responsive to the exchange rate than is the case for export prices to other destinations, which is consistent with results in the literature suggesting that import price pass-through in the U.S. market is relatively low. We also find that moves in the exchange rate sensitivity of export prices over time have been significantly affected by country and region-specific factors, including the Asian financial crisis (for emerging Asia), deepening integration with the United States (for Canada), and the effects of the 1992 ERM crisis (for the United Kingdom).
