We use a detailed database to investigate exchange-rate pass-through at the product level for a large number of countries. The empirical analysis suggests that pricing behaviours are dichotomous, with complete pass-through in around 25% of sectors and significant pricing-to-market in the remaining ones. Average long-run pass-through coefficient is close to 80%; this result hides a strong heterogeneity of pass-through behaviours across sectors. Even when composition effects are controlled for, average pass-through varies across importing countries. The econometric analysis shows that pass-through tends to be higher in volatile environments; in less developed countries; in weakly integrated markets.
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Find related papers by JEL classification: F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies F31 - International Economics - - International Finance - - - Foreign Exchange F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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