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Pricing to market of Italian exporting firms

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  • Roberto Basile

    ()
    (ISAE - Institute for Studies and Economic Analyses)

  • Sergio de Nardis

    ()
    (ISAE - Institute for Studies and Economic Analyses)

  • Alessandro Girardi

    ()
    (ISAE - Institute for Studies and Economic Analyses)

Abstract

This paper investigates the pricing-to-market (PTM) behaviour of Italian exporting firms, using quarterly survey data by sector and by region over the period 1999q1-2005q2. A partial equilibrium imperfect competition model provides the structure according to which the orthogonality of structural shocks is derived. Impulse-response analysis shows non-negligible reactions of exportdomestic price margins to unanticipated changes in cost competitiveness and in foreign and domestic demand levels, even though these effects appear to be of a transitory nature. For the period 1999-2001 a typical PTM behaviour emerges, while during the most recent years favourable foreign demand conditions allowed firms to increase their export-domestic price margins in face of a strong deterioration of their cost competitiveness. Macroeconomic implications of the observed PTM behaviour are also discussed.

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Bibliographic Info

Paper provided by ISTAT - Italian National Institute of Statistics - (Rome, ITALY) in its series ISAE Working Papers with number 70.

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Length: 45 pages
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:isa:wpaper:70

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Keywords: Pricing to market; survey data; panel-VAR models;

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  1. Pinelopi K. Goldberg & Michael M. Knetter, 1996. "Goods Prices and Exchange Rates: What Have We Learned?," NBER Working Papers 5862, National Bureau of Economic Research, Inc.
  2. Joseph E. Gagnon & Michael M. Knetter, 1992. "Markup Adjustment and Exchange Rate Fluctuations: Evidence From Panel Data on Automobile Exports," NBER Working Papers 4123, National Bureau of Economic Research, Inc.
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  4. Bergin, Paul R. & Feenstra, Robert C., 2001. "Pricing-to-market, staggered contracts, and real exchange rate persistence," Journal of International Economics, Elsevier, vol. 54(2), pages 333-359, August.
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  16. Saeid Mahdavi, 2002. "The response of the US export prices to changes in the dollar's effective exchange rate: further evidence from industry level data," Applied Economics, Taylor & Francis Journals, vol. 34(17), pages 2115-2125.
  17. Marston, Richard C., 1990. "Pricing to market in Japanese manufacturing," Journal of International Economics, Elsevier, vol. 29(3-4), pages 217-236, November.
  18. Naug, Bjorn & Nymoen, Ragnar, 1996. " Pricing to Market in a Small Open Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(3), pages 329-50.
  19. Betts, Caroline & Devereux, Michael B., 1996. "The exchange rate in a model of pricing-to-market," European Economic Review, Elsevier, vol. 40(3-5), pages 1007-1021, April.
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Cited by:
  1. Georg H. Strasser, 2011. "Exchange Rate Pass-Through and Credit Constraints: Firms Price to Market as Long as They Can," Boston College Working Papers in Economics 788, Boston College Department of Economics, revised 13 Feb 2012.
  2. 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 2007-25, Observatoire Francais des Conjonctures Economiques (OFCE).
  3. Strasser, Georg, 2013. "Exchange rate pass-through and credit constraints," Journal of Monetary Economics, Elsevier, vol. 60(1), pages 25-38.
  4. Hélène Erkel-Rousse, 2007. "Business Tendency Surveys: From Short-Term Analysis to Structural Studies," Economie et Statistique, Institut National de la Statistique et des Etudes Economiques, vol. 395, pages 3-11, January.
  5. Roberto Basile & Sergio de Nardis & Alessandro Girardi, 2012. "Pricing to market, firm heterogeneity and the role of quality," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 148(4), pages 595-615, December.
  6. Borin, Alessandro & Lamieri, Marco, 2007. "Estimating Product Quality in International Trade," MPRA Paper 14678, University Library of Munich, Germany.

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