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Is the Exchange Rate Pass-Through into Import Prices Declining? Evidence from Chile

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  • Roberto Alvarez
  • Patricio Jaramillo
  • Jorge Selaive

Abstract

Several empirical studies have found that the exchange rate pass-through (ERPT) into import prices is not complete and declined during the 1990s. In this paper we carry out a reexamination of these findings using a unique database of disaggregated import prices both at the border and wholesale levels for Chile. Our results do not support previous conclusions. We find a complete and nondeclining ERPT in the long run at both pricing levels of Chilean imports. We extend previous evidence by showing that, in the short run, wholesale prices seem to be less sensitive to exchange rate variations. In addition, we find weak evidence of asymmetric pass-through from appreciations versus depreciations for the aggregate import indexes in the short run and the long run.

Suggested Citation

  • Roberto Alvarez & Patricio Jaramillo & Jorge Selaive, 2012. "Is the Exchange Rate Pass-Through into Import Prices Declining? Evidence from Chile," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(1), pages 100-116, January.
    • Handle: RePEc:mes:emfitr:v:48:y:2012:i:1:p:100-116
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    Citations

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    Cited by:

    1. Baharumshah, Ahmad Zubaidi & Sirag, Abdalla & Soon, Siew-Voon, 2017. "Asymmetric exchange rate pass-through in an emerging market economy: The case of Mexico," Research in International Business and Finance, Elsevier, vol. 41(C), pages 247-259.
    2. Nguyen Van Phuc & Vo Hong Duc, 2021. "Macroeconomics Determinants of Exchange Rate Pass-Through: New Evidence from the Asia-Pacific Region," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(1), pages 5-20, January.
    3. Jovic, Srdjan & Smigic Miladinovic, Jasmina & Micic, Radmila & Markovic, Sanja & Rakic, Goran, 2019. "Analysing of exchange rate and gross domestic product (GDP) by adaptive neuro fuzzy inference system (ANFIS)," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 513(C), pages 333-338.
    4. Mustafa Ozer & Veysel Inal & Mustafa Kirca, 0. "The Relationship Between the Health Services Price Index and The Real Effective Exchange Rate Index in Turkey: A Frequency Domain Causality Analysis," EKOIST Journal of Econometrics and Statistics, Istanbul University, Faculty of Economics, vol. 0(36), pages 21-41, June.
    5. Meryem Türel & Ayhan Orhan, 2022. "Asymmetries in Exchange Rate Pass-through in Turkey: A Threshold VAR Analysis," Prague Economic Papers, Prague University of Economics and Business, vol. 2022(3-4), pages 276-295.

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