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Exchange Rate Pass‐Through: Testing the Small Country Assumption for Australia

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  • JACQUELINE DWYER
  • CHRISTOPHER KENT
  • ANDREW PEASE

Abstract

This paper examines exchange rate pass‐through for the prices of imports and manufactured exports. It is found that, in the long run, exchange rate pass‐through over the docks is complete for both classes of good. However, pass‐through to import prices is more rapid than that to manufactured export prices. Also, evidence is presented of a substantial increase in pass‐through to manufactured export prices, in keeping with increased international integration.

Suggested Citation

  • Jacqueline Dwyer & Christopher Kent & Andrew Pease, 1994. "Exchange Rate Pass‐Through: Testing the Small Country Assumption for Australia," The Economic Record, The Economic Society of Australia, vol. 70(211), pages 408-423, December.
    • Handle: RePEc:bla:ecorec:v:70:y:1994:i:211:p:408-423
    DOI: 10.1111/j.1475-4932.1994.tb01859.x
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    Cited by:

    1. Tapiwa D. Karoro & Meshach J. Aziakpono & Nicolette Cattaneo, 2009. "Exchange Rate Pass‐Through To Import Prices In South Africa: Is There Asymmetry?1," South African Journal of Economics, Economic Society of South Africa, vol. 77(3), pages 380-398, September.
    2. Mallick, Sushanta & Marques, Helena, 2012. "Pricing to market with trade liberalization: The role of market heterogeneity and product differentiation in India’s exports," Journal of International Money and Finance, Elsevier, vol. 31(2), pages 310-336.
    3. Guy Debelle & Jenny Wilkinson, 2002. "Inflation Targeting in the Context of IMF-Supported Adjustment Programs," Central Banking, Analysis, and Economic Policies Book Series, in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.),Inflation Targeting: Desing, Performance, Challenges, edition 1, volume 5, chapter 11, pages 465-500, Central Bank of Chile.
    4. Leitemo,K., 1999. "Inflation targeting strategies in small open economies," Memorandum 21/1999, Oslo University, Department of Economics.
    5. Guneratne Banda Wickremasinghe & Param Silvapulle, 2004. "Exchange Rate Pass-Through to Manufactured Import Prices: The Case of Japan," International Trade 0406006, University Library of Munich, Germany.
    6. Jos� J. Cao-Alvira, 2014. "Real Exchange Rate Volatility on the Short- and Long-Run Trade Dynamics in Colombia," The International Trade Journal, Taylor & Francis Journals, vol. 28(1), pages 45-64, March.
    7. Guy Debelle & Jenny Wilkinson, 2001. "Inflation Targeting and the Inflation Process: Lessons from an Open Economy," Working Papers Central Bank of Chile 111, Central Bank of Chile.
    8. Billmeier, Andreas & Bonato, Leo, 2004. "Exchange rate pass-through and monetary policy in Croatia," Journal of Comparative Economics, Elsevier, vol. 32(3), pages 426-444, September.
    9. Bowe, Michael & Saltvedt, Thina M., 2004. "Currency invoicing practices, exchange rate volatility and pricing-to-market: evidence from product level data," International Business Review, Elsevier, vol. 13(3), pages 281-308, June.
    10. Kevin Nell, 2000. "Imported Inflation in South Africa: An Empirical Study," Studies in Economics 0005, School of Economics, University of Kent.
    11. Meshach J. Aziakpono & Nicolette Cattaneo & T. D. Karoro, 2008. "Exchange rate pass-through to import prices in South Africa: Is there asymmetry?," Working Papers 079, Economic Research Southern Africa.
    12. Tapiwa D. Karoro & Meshach J. Aziakpono & Nicolette Cattaneo, 2009. "Exchange Rate Pass‐Through To Import Prices In South Africa: Is There Asymmetry?1," South African Journal of Economics, Economic Society of South Africa, vol. 77(3), pages 380-398, September.

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