Exchange Rate Transmission into Industry-Level Export Prices: A Tale of Two Policy Regimes in India
AbstractIn the 1990s, India initiated extensive policy reforms that included the adoption of a flexible exchange rate regime and an acceleration of trade liberalization. This paper analyzes the impact of the policy reforms on exchange rate pass-through into export prices using sectoral panel data (at the two-digit Standard International Trade Classification level) for the pre-reform (1980–90) and post-reform (1991–2001) periods. Several econometric tests revealed the existence of a structural break in pass-through into export prices around 1991. The panel results suggest that the number of industries exhibiting incomplete pass-through increased in the 1990s relative to the 1980s, reflecting a higher degree of pricing power by these firms as export prices react to exchange rate changes in more sectors, after having controlled for the effect of product shares, marginal cost variations, and a macroeconomic policy index. These changes in pass-through behavior may be partly attributable to the elimination of currency and trade controls, which increased competition among firms and fostered a concern with market share gains in the 1990s, over an attempt to make profits as a result of depreciation in the 1980s. IMF Staff Papers (2008) 55, 83–108; doi:10.1057/palgrave.imfsp.9450027; published online 15 January 2008
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Palgrave Macmillan in its journal IMF Staff Papers.
Volume (Year): 55 (2008)
Issue (Month): 1 (April)
Contact details of provider:
Web page: http://www.palgrave-journals.com/
Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Yushi Yoshida, 2008.
"A New Evidence for Exchange Rate Pass-through: Disaggregated Trade Data from Local Ports,"
31, Kyushu Sangyo University, Faculty of Economics, revised Dec 2008.
- Yoshida, Yushi, 2010. "New evidence for exchange rate pass-through: Disaggregated trade data from local ports," International Review of Economics & Finance, Elsevier, vol. 19(1), pages 3-12, January.
- YOSHIDA Yushi, 2013.
"Market Share and Exchange Rate Pass-through: Competition among exporters of the same nationality,"
13084, Research Institute of Economy, Trade and Industry (RIETI).
- Yushi Yoshida, 2009. "Market Share and Exchange Rate Pass-through:Competition among Exporters of the Same Nationality," Discussion Papers 37, Kyushu Sangyo University, Faculty of Economics.
- Naz, Farah & Mohsin, Asma & Zaman, Khalid, 2012. "Exchange rate pass-through in to inflation: New insights in to the cointegration relationship from Pakistan," Economic Modelling, Elsevier, vol. 29(6), pages 2205-2221.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elizabeth Gale).
If references are entirely missing, you can add them using this form.