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Pricing to Market Behaviour and Exchange Rate Pass-Through in Japanese Exports

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  • Athukorala, Premachandra
  • Menon, Jayant

Abstract

This paper examines the relationship between exchange rate changes and Japanese export pricing behavior employing a methodology which permits the separate measurement of pricing to market behavior and the cost impact of exchange rate changes. The results suggest that incomplete pass-through of exchange rate changes is a pervasive phenomenon, but rejects the widely held view that Japanese export firms have relied more heavily on pricing to market strategies during the period of yen appreciation in order to maintain market shares. There is also evidence that estimates which capture only pricing to market behavior may over-emphasise the degree of pass-through to the extent that cost of production is sensitive to exchange rate changes. Copyright 1994 by Royal Economic Society.

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 104 (1994)
Issue (Month): 423 (March)
Pages: 271-81

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Handle: RePEc:ecj:econjl:v:104:y:1994:i:423:p:271-81

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  1. Kikuchi, Ayumi & Sumner, Michael, 1997. "Exchange-rate pass-through in Japanese export pricing," Discussion Papers in Economics 06/97, Department of Economics, University of Sussex.
  2. Thomas Klitgaard, 1999. "Exchange rates and profit margins: the case of Japanese exporters," Economic Policy Review, Federal Reserve Bank of New York, issue Apr, pages 41-54.
  3. Harry Bloch, 1999. "Does Foreign Trade Substitute For Domestic Competition Policy?," Economic Papers, The Economic Society of Australia, vol. 18(3), pages 1-18, 09.
  4. Michael Bleaney, 1997. "Invoicing-Currency Effects in the Pricing of Japanese Exports of Manufactures," Canadian Journal of Economics, Canadian Economics Association, vol. 30(4), pages 968-74, November.
  5. Sushanta Mallick & Helena Marques, 2007. "Pass-through of Exchange Rate and Tariffs into Import Prices of India: Currency Depreciation versus Import Liberalisation," Working Papers 3, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
  6. Roberto Basile & Anna Giunta & Jeffrey B. Nugent, 2003. "Foreign Expansion by Italian Manufacturing Firms in the Nineties: an Ordered Probit Analysis," Industrial Organization 0312001, EconWPA.
  7. Claudio Agostini, 2012. "Incidencia Tributaria en el Mercado de las Gasolinas en Chile," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 27(2), pages 55-73, October.
  8. Douglas Steel & Alan King, 2004. "Exchange Rate Pass-through: The Role of Regime Changes," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(3), pages 301-322.
  9. Gross, Dominique M. & Schmitt, Nicolas, 2000. "Exchange rate pass-through and dynamic oligopoly: an empirical investigation," Journal of International Economics, Elsevier, vol. 52(1), pages 89-112, October.
  10. Lourdes Martín & Diego Rodríguez, 2004. "Pricing to market at firm level," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 140(2), pages 302-320, June.
  11. Aksoy, Yunus & Riyanto, Yohanes E, 2000. "Exchange Rate Pass-Through in Vertically Related Markets," Review of International Economics, Wiley Blackwell, vol. 8(2), pages 235-51, May.
  12. Saeid Mahdavi, 2002. "The response of the US export prices to changes in the dollar's effective exchange rate: further evidence from industry level data," Applied Economics, Taylor & Francis Journals, vol. 34(17), pages 2115-2125.
  13. Fang, WenShwo & Lai, YiHao & Thompson, Henry, 2007. "Exchange rates, exchange risk, and Asian export revenue," International Review of Economics & Finance, Elsevier, vol. 16(2), pages 237-254.
  14. Tilak Abeysinghe & Tan Lin Yeok, 1998. "Exchange rate appreciation and export competitiveness. The case of Singapore," Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 51-55.
  15. Merih Uctum, 2003. "Pricing-to-Market: the Japanese Experience with a Falling Yen and the Asian Crisis," Review of International Economics, Wiley Blackwell, vol. 11(2), pages 360-378, 05.
  16. Salvador Gil-Pareja, 2000. "Exchange rates and European countries’ export prices: An empirical test for asymmetries in pricing to market behavior," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 136(1), pages 1-23, March.
  17. Aruna Kumar Dash & V. Narasimhan, 2011. "Exchange Rate Pass-through," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 12(1), pages 1-23, March.
  18. David Greenaway & Richard Kneller & Xufei Zhang, 2010. "The Effect of Exchange Rates on Firm Exports: The Role of Imported Intermediate Inputs," The World Economy, Wiley Blackwell, vol. 33(8), pages 961-986, 08.
  19. Schnabl, Gunther & Baur, Dirk, 2002. "Purchasing power parity: Granger causality tests for the yen-dollar exchange rate," Japan and the World Economy, Elsevier, vol. 14(4), pages 425-444, December.
  20. Tange, Toshiko, 1997. "Exchange rates and export prices of Japanese manufacturing," Journal of Policy Modeling, Elsevier, vol. 19(2), pages 195-206, April.
  21. Menon, Jayant, 1995. "The Relationship between the Law of One Price and Exchange Rate Pass-through," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 48(4), pages 551-568.
  22. Olive, Michael, 2004. "Pricing behaviour in Japanese manufacturing: a comparative study," Japan and the World Economy, Elsevier, vol. 16(4), pages 417-429, December.
  23. Aw, Bee Yan & Batra, Geeta & Roberts, Mark J., 2001. "Firm heterogeneity and export-domestic price differentials: A study of Taiwanese electronics products," Journal of International Economics, Elsevier, vol. 54(1), pages 149-169, June.
  24. Eleanor Doyle, 2004. "Exchange rate pass-through in a small open economy: the Anglo-Irish case," Applied Economics, Taylor & Francis Journals, vol. 36(5), pages 443-455.
  25. Rtta Hanninen & Anne Toppinen, 1999. "Long-run price effects of exchange rate changes in Finnish pulp and paper exports," Applied Economics, Taylor & Francis Journals, vol. 31(8), pages 947-956.
  26. Sushanta Mallick & Helena Marques, 2006. "Sectoral Exchange Rate Pass-Through: Testing The Impact Of Policy Reforms In India," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(2), pages 280-303, 05.
  27. Menon, Jayant, 1996. "The Degree and Determinants of Exchange Rate Pass-through: Market Structure, Non-tariff Barriers and Multinational Corporations," Economic Journal, Royal Economic Society, vol. 106(435), pages 434-44, March.
  28. Muqun Li & Wei Liu & Shunfeng Song, 2010. "Export Relationships among China, Japan, and South Korea," Review of Development Economics, Wiley Blackwell, vol. 14(s1), pages 547-562, 08.
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