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Exchange rate pass-through and its determinants in Canadian manufacturing industries

Author

Listed:
  • Stanley W. Kardasz
  • Kenneth R. Stollery

Abstract

In this paper the pass-through of exchange rate changes into the real prices of domestically produced and imported goods in Canadian manufacturing industries is examined through industry estimates of the pass-through elasticities and a cross-section analysis of their determinants. We find that the domestic pass-through elasticity increases with the effect of the exchange rate on domestic costs of production, the export share, the elasticity of substitution between imports and domestic goods, and the domestic advertising intensity. The import elasticity increases with the elasticity of substitution and the rate of price protection and decreases with advertising intensity.

Suggested Citation

  • Stanley W. Kardasz & Kenneth R. Stollery, 2001. "Exchange rate pass-through and its determinants in Canadian manufacturing industries," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 719-738, August.
    • Handle: RePEc:cje:issued:v:34:y:2001:i:3:p:719-738
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    Citations

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    Cited by:

    1. John R. Baldwin & Beiling Yan, 2007. "Exchange Rate Cycles and Canada/US Manufacturing Prices," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(3), pages 508-533, October.
    2. Peter Rowland, 2004. "Exchange Rate Pass-Through To Domestic Prices: The Case Of Colombia," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 22(47), pages 106-125, December.
    3. Yuriy Gorodnichenko & Oleksandr Talavera, 2017. "Price Setting in Online Markets: Basic Facts, International Comparisons, and Cross-Border Integration," American Economic Review, American Economic Association, vol. 107(1), pages 249-282, January.
    4. Andrés González & Hernán Rincón & Norberto Rodríguez, 2008. "La transmisión de los choques a la tasa de cambio sobre la inflación de los bienes importados en presencia de asimetrías," Borradores de Economia 532, Banco de la Republica de Colombia.
    5. Danny Leung & Beverly Lapham, 2006. "Industry Restructuring, Mark-ups, And Exchange Rate Pass-through," Working Paper 1120, Economics Department, Queen's University.
    6. 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.
    7. Carmen Astrid Romero, 2012. "El efecto transmisión del tipo de cambio en Colombia durante los anos de la industrialización," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 30(67), pages 216-251, July.
    8. Idrisov, Georgy (Идрисов, Георгий) & Ponomarev, Yury (Пономарев, Юрий) & Pleskachev, Yury Andreevich (Плескачев, Юрий Андреевич), 2016. "Analysis of Joint Exchange Rate Pass-Through and Import Duty Rates in the Russian Economy [Анализ Совместного Эффекта Переноса Обменного Курса И Ввозных Пошлин В Цены В Российской Экономике]," Working Papers 1666, Russian Presidential Academy of National Economy and Public Administration.
    9. Baldwin, John R. Yan, Beiling, 2006. "Les mouvements cycliques du taux de change et les prix dans les secteurs canadien et américain de la fabrication," Série de documents de recherche sur l'analyse économique (AE) 2006041f, Statistics Canada, Direction des études analytiques.
    10. Ponomarev, Yuri (Пономарев, Юрий), 2015. "The effect of the transfer dynamics of the ruble exchange rate in prices in Russian industries [Эффект Переноса Динамики Обменного Курса Рубля В Цены В Российских Отраслях Промышленности]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 5, pages 53-70.
    11. Andrés González & Hernán Rincóm & Norberto Rodríguez, 2008. "La transmisión de los choques a la tasa de cambio sobre la inflación," Borradores de Economia 5089, Banco de la Republica.
    12. Mirdala, Rajmund, 2013. "Exchange Rate Pass-Through to Domestic Prices under Different Exchange Rate Regimes," MPRA Paper 53209, University Library of Munich, Germany.
    13. Mirdala, Rajmund, 2015. "Exchange Rate Pass-Through in the Euro Area," MPRA Paper 68862, University Library of Munich, Germany.
    14. Olive, Michael, 2004. "Pricing behaviour in Japanese manufacturing: a comparative study," Japan and the World Economy, Elsevier, vol. 16(4), pages 417-429, December.
    15. Peter Rowland, 2003. "Exchange Rate Pass-Throught to Domestic Prices: The Case of Colombia," Borradores de Economia 254, Banco de la Republica de Colombia.
    16. Stanley Kardasz & Kenneth Stollery, 2005. "Exchange rate pass-through in Canadian manufacturing: its direct and indirect components," Applied Economics, Taylor & Francis Journals, vol. 37(15), pages 1763-1776.
    17. Xuxin Yu, 2007. "The Industry Determinants of Exchange Rate Pass-Through to Chinese Domestic Prices, 1980-2002," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 14(3), pages 393-408.
    18. Mohammad Shakeri & Richard S. Gray, 2013. "The Industry Determinants of Exchange Rate Pass-Through into Canadian Producer Prices," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 20(1), pages 15-38, February.
    19. Mallick, Sushanta & Marques, Helena, 2010. "Data frequency and exchange rate pass-through: Evidence from India's exports," International Review of Economics & Finance, Elsevier, vol. 19(1), pages 13-22, January.
    20. Stan Kardasz & Ken Stollery, 2004. "Exchange Rate Pass-through in Canadian Manufacturing: Its Direct and Indirect Components," Working Papers 04001, University of Waterloo, Department of Economics, revised Jan 2004.
    21. Baldwin, John R. & Yan, Beiling, 2008. "Domestic and foreign influences on Canadian prices," International Review of Economics & Finance, Elsevier, vol. 17(4), pages 546-557, October.
    22. Peter Rowland, 2003. "Exchange Rate Pass-Through To Domestic Prices: The Case Of Colombia," Borradores de Economia 2683, Banco de la Republica.

    More about this item

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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