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Long-run price effects of exchange rate changes in Finnish pulp and paper exports

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  • Rtta Hanninen
  • Anne Toppinen
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    Abstract

    This paper presents long-run exchange rate elasticities of Finnish newsprint and pulp export prices in the United Kingdom (UK) and Germany over the period 1980-94. The elasticities were estimated for a markup pricing model using Johansen's cointegration method. The magnitudes of the elasticity estimates obtained by imposing price homogeneity indicate that pass-through of exchange rate changes to export prices has been incomplete in both markets. For newsprint, the pass-through elasticity was 0.60 in the UK and 0.46 in Germany, which means that about one half of the changes in the exchange rates is reflected in prices as expressed in the destination countries' currencies and about a half in prices measured in Finnish markka. Instead, in pulp exports the pass-through elasticities differed from each other between the two destination countries more clearly than in newsprint exports, indicating a different pricing behaviour of Finnish pulp exporters in the UK and Germany when exchange rate changes. Pass-through was small in the UK pulp market (0.07) as compared to Germany (0.68).

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/000368499323661
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    Bibliographic Info

    Article provided by Taylor and Francis Journals in its journal Applied Economics.

    Volume (Year): 31 (1999)
    Issue (Month): 8 ()
    Pages: 947-956

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    Handle: RePEc:taf:applec:v:31:y:1999:i:8:p:947-956

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    Cited by:
    1. Lu, M. & Zhang, Z., 1998. "Exchange rate reform and its inflationary consequences: an empirical analysis for China," Discussion Paper Series In Economics And Econometrics 9808, Economics Division, School of Social Sciences, University of Southampton.
    2. Bolkesjø, Torjus F. & Buongiorno, Joseph, 2006. "Short- and long-run exchange rate effects on forest product trade: Evidence from panel data," Journal of Forest Economics, Elsevier, vol. 11(4), pages 205-221, January.
    3. Prema-chandra Athukorala & Jayant Manon, 1994. "Exchange Rates and Strategic Pricing: the Case of Swedish Machinery Exports," Working Papers 1994.08, School of Economics, La Trobe University.
    4. Hanninen, Riitta & Laaksonen-Craig, Susanna & Toppinen, Anne, 2000. "Emu And Forest Products Pricing And Europe," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36502, Western Agricultural Economics Association.
    5. Daigneault, Adam J. & Sohngen, Brent & Sedjo, Roger, 2008. "Exchange rates and the competitiveness of the United States timber sector in a global economy," Forest Policy and Economics, Elsevier, vol. 10(3), pages 108-116, January.
    6. Daigneault, Adam J. & Sohngen, Brent & Sedjo, Roger A., 2005. "Exchange Rates and the Competitiveness of the US Timber Sector in a Global Economy," 2005 Annual meeting, July 24-27, Providence, RI 19439, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Athukorala, Premachandra & Menon, Jayant, 1994. "Pricing to Market Behaviour and Exchange Rate Pass-Through in Japanese Exports," Economic Journal, Royal Economic Society, vol. 104(423), pages 271-81, March.
    8. Juuso Vataja, 2001. "On the interdependence of Finnish and Swedish newsprint prices," Finnish Economic Papers, Finnish Economic Association, vol. 14(2), pages 120-130, Autumn.
    9. Bowe, Michael & Saltvedt, Thina M., 2004. "Currency invoicing practices, exchange rate volatility and pricing-to-market: evidence from product level data," International Business Review, Elsevier, vol. 13(3), pages 281-308, June.
    10. Athukorala, Premachandra, 1991. "Exchange rate pass-through : The case of Korean exports of manufactures," Economics Letters, Elsevier, vol. 35(1), pages 79-84, January.

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