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Exchange-Rate Pass-Trough at the Product Level

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  • Guillaume Gaulier
  • Amina Lahrèche-Révil
  • Isabelle Méjean

Abstract

We use a detailed database to investigate exchange-rate pass-through at the product level for a large number of countries. The empirical analysis suggests that pricing behaviours are dichotomous, with complete pass-through in around 25% of sectors and significant pricing-to-market in the remaining ones. Average long-run pass-through coefficient is close to 80%; this result hides a strong heterogeneity of pass-through behaviours across sectors. Even when composition effects are controlled for, average pass-through varies across importing countries. The econometric analysis shows that pass-through tends to be higher in volatile environments; in less developed countries; in weakly integrated markets.

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Bibliographic Info

Paper provided by CEPII research center in its series Working Papers with number 2006-02.

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Date of creation: Feb 2006
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Handle: RePEc:cii:cepidt:2006-02

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Keywords: Prices; Sectors;

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References

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Citations

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Cited by:
  1. Mirdala, Rajmund, 2013. "Exchange Rate Pass-Through to Domestic Prices under Different Exchange Rate Regimes," MPRA Paper 53209, University Library of Munich, Germany.
  2. Agnès Bénassy-Quéré & Lionel Fontagné & Horst Raff, 2011. "Exchange-rate Misalignments in Duopoly: The Case of Airbus and Boeing," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00603386, HAL.
  3. Fauceglia, Dario & Shingal, Anirudh & Wermelinger, Martin, 2012. ""Natural hedging" of exchange rate risk: The role of imported input prices," MPRA Paper 39438, University Library of Munich, Germany.
  4. Eike Berner, 2010. "Exchange rate pass-through: new evidence from German micro data," Economie Internationale, CEPII research center, CEPII research center, issue 124, pages 75-100.
  5. Bussière, Matthieu & Peltonen, Tuomas A., 2008. "Exchange rate pass-through in the global economy: the role of emerging market economies," Working Paper Series, European Central Bank 0951, European Central Bank.
  6. Sarah Guillou & Stefano Schiavo, 2007. "Export prices and increasing world competition: evidence from French, German, and Italian pricing behavior," Documents de Travail de l'OFCE, Observatoire Francais des Conjonctures Economiques (OFCE) 2007-25, Observatoire Francais des Conjonctures Economiques (OFCE).
  7. Jimborean, R., 2011. "The Exchange Rate Pass-Through in the New EU Member States," Working papers, Banque de France 341, Banque de France.
  8. Stephane Dees & Matthias Burgert & Nicolas Parent, 2008. "Import Price Dynamics in Major Advanced Economies and Heterogeneity in Exchange Rate Pass-Through," Working Papers, Bank of Canada 08-39, Bank of Canada.
  9. Adam, Antonis & Moutos, Thomas, 2014. "Do capital importing countries pay higher prices for their imports of goods?," Journal of International Money and Finance, Elsevier, Elsevier, vol. 40(C), pages 95-108.
  10. Brun-Aguerre, Raphael & Fuertes, Ana-Maria & Phylaktis, Kate, 2012. "Exchange rate pass-through into import prices revisited: What drives it?," Journal of International Money and Finance, Elsevier, Elsevier, vol. 31(4), pages 818-844.
  11. Yoshida, Yushi, 2010. "New evidence for exchange rate pass-through: Disaggregated trade data from local ports," International Review of Economics & Finance, Elsevier, Elsevier, vol. 19(1), pages 3-12, January.
  12. 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, Elsevier, vol. 31(2), pages 310-336.

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