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Exchange-rate pass-through at the product level

Author

Listed:
  • Isabelle Méjean

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique)

  • Guillaume Gaulier

    (Banque de France)

  • Amina Lahreche-Révil

    (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, UPJV - Université de Picardie Jules Verne)

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.

Suggested Citation

  • Isabelle Méjean & Guillaume Gaulier & Amina Lahreche-Révil, 2008. "Exchange-rate pass-through at the product level," Post-Print hal-00363075, HAL.
    • Handle: RePEc:hal:journl:hal-00363075
    DOI: 10.1111/j.1365-2966.2008.00469.x
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    References listed on IDEAS

    as
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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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