The Pass-Through of Exchange Rate Changes to Import Prices
AbstractIn this paper we analyze the empirical relevance of exchange rate pass-through for Finland, Sweden and Denmark during the period 1980–1994. Further, we attempt to determine if there has been a structural change in the pass-through relationship in the1990s. We find that about half the changes in exchange rates and world prices are passed through to import prices within one year, and three-quarters of such changes are passed through to import prices in two years. Moreover, there are no major differences among countries. Parameter constancy tests indicate the possibility of a structural change where the pass-through has slowed in recent years. Possible explanations of this are that the exchange rate regime has changed and competition has increased.
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Bibliographic InfoPaper provided by Bank of Finland in its series Research Discussion Papers with number 26/1996.
Length: 33 pages
Date of creation: 29 Oct 1996
Date of revision:
exchange rate pass-through; import prices; structural change;
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