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Exchange Rate Pass-Through Effects:A Disaggregate Analysis Of Colombianimports Of Manufactured Goods

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Author Info
HERNÁN RINCÓN ()
ÉDGAR CAICEDO
NORBERTO RODRÍGUEZ ()

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Abstract

This paper quantifi es the exchange rate pass-through effects on import prices within a sample of Colombian manufactured imports. Also, whether the foreign exchange and infl ation regimes affect the degree of pass-through is evaluated. The analytical framework used was a mark-up model. The main fi nding is that the long-run pass-through elasticities are stable and go from 0.1 to 0.8 and the short-run ones are unstable and go from 0.1 to 0.7, support-ing mark-up hypotheses, in contrast to the hypoth-eses of perfect market competition and complete pass-through. The fi ndings also show evidence of the variability and different degrees of pass-trough among manufacturing sectors, which confi rm the importance of using dynamic models and disaggre-gate data for an analysis of the pass-through. Both, the hypothesis that under a fl oating regime there is a low degree of pass-through and the hypothesis that a low infl ation environment has the same result are not supporte

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Article provided by BANCO DE LA REPÚBLICA - ESPE in its journal ENSAYOS SOBRE POLÍTICA ECONÓMICA.

Volume (Year): (2007)
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Handle: RePEc:col:000107:004641

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  2. Hernán Rincón, 1999. "Testing The Short And Long Run Exchange Rate Effects On The Trade Balance: The Case Of Colombia," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE. [Downloadable!]
  3. Kim, Yoonbai, 1990. "Exchange Rates and Import Prices in the United States: A Varying-Parameter Estimation of Exchange-Rate Pass-Through," Journal of Business & Economic Statistics, American Statistical Association, vol. 8(3), pages 305-15, July.
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  8. Ariel Burstein & Martin Eichenbaum & Sergio Rebelo, 2002. "Why Are Rates of Inflation So Low After Large Devaluations?," NBER Working Papers 8748, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  18. Dornbusch, Rudiger, 1987. "Exchange Rates and Prices," American Economic Review, American Economic Association, vol. 77(1), pages 93-106, March.
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  23. Goldstein, Morris & Khan, Mohsin S., 1985. "Income and price effects in foreign trade," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 20, pages 1041-1105 Elsevier. [Downloadable!] (restricted)
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  27. Paul R. Krugman & Richard E. Baldwin, 1987. "The Persistence of the U.S. Trade Deficit," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1987-1), pages 1-56. [Downloadable!]
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  29. Taylor, John B., 2000. "Low inflation, pass-through, and the pricing power of firms," European Economic Review, Elsevier, vol. 44(7), pages 1389-1408, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Juan Carlos Parra Alvarez, 2008. "Sensibilidad del IPC a la Tasa de Cambio en Colombia: Una Medición de Largo Plazo," BORRADORES DE ECONOMIA 005211, BANCO DE LA REPÚBLICA. [Downloadable!]
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  2. Julián Pérez Amaya, 2006. "Evaluación De Reglas De Tasa De Interés En Un Modelo De Economía Pequeña Y Abierta," BORRADORES DE ECONOMIA 002638, BANCO DE LA REPÚBLICA. [Downloadable!]
  3. Julian Pérez Amaya, . "Evaluación de Reglas de Tasa de Interés en un Modelo de Economía Pequeña y Abierta," Borradores de Economia 385, Banco de la Republica de Colombia. [Downloadable!]
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