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The Choice of Exchange-Rate Index and Domestic Price Passthrough


  • Feinberg, Robert M


This paper finds that the extent of real appreciation and real depreciation in the external value of the dollar since the late 70s has been overstated for most industries by the Federal Reserve Board's 10-country index, and is better proxied by the Dallas Fed's 101-country index. Earlier findings seem robust to the choice of index. Namely, changes in the real external value of the dollar have passed most fully into domestic prices of industries heavily reliant on imported inputs and producing import substitutes, and least fully into capital-intensive and concentrated industries and those protected by entry barriers. Copyright 1991 by Blackwell Publishing Ltd.

Suggested Citation

  • Feinberg, Robert M, 1991. "The Choice of Exchange-Rate Index and Domestic Price Passthrough," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 409-420, June.
  • Handle: RePEc:bla:jindec:v:39:y:1991:i:4:p:409-20

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    References listed on IDEAS

    1. Porter, Michael E, 1976. "Interbrand Choice, Media Mix and Market Performance," American Economic Review, American Economic Association, vol. 66(2), pages 398-406, May.
    2. Nickell, Stephen J & Metcalf, David, 1978. "Monopolistic Industries and Monopoly Profits or, Are Kellogg's Cornflakes Overpriced?," Economic Journal, Royal Economic Society, vol. 88(350), pages 254-268, June.
    3. Pagoulatos, Emilio & Sorensen, Robert, 1986. "What determines the elasticity of industry demand?," International Journal of Industrial Organization, Elsevier, vol. 4(3), pages 237-250, September.
    4. Joseph E. Stiglitz & G. Frank Mathewson (ed.), 1986. "New Developments in the Analysis of Market Structure," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262690934, January.
    5. Cowling, Keith & Waterson, Michael, 1976. "Price-Cost Margins and Market Structure," Economica, London School of Economics and Political Science, vol. 43(171), pages 267-274, August.
    6. Connor, John M & Peterson, Everett B, 1992. "Market-Structure Determinants of National Brand-Private Label Price Differences of Manufactured Food Products," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 157-171, June.
    7. A. P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," Review of Economic Studies, Oxford University Press, vol. 1(3), pages 157-175.
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    Cited by:

    1. Feenstra, Robert C., 1995. "Estimating the effects of trade policy," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 30, pages 1553-1595 Elsevier.
    2. Peter Rowland, 2004. "Exchange Rate Pass-Through To Domestic Prices: The Case Of Colombia," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 22(47), pages 106-125, December.
    3. Peter Rowland, 2003. "Exchange Rate Pass-Throught to Domestic Prices: The Case of Colombia," Borradores de Economia 254, Banco de la Republica de Colombia.
    4. Cletus C. Coughlin & Patricia S. Pollard & Jerram C. Betts, 1997. "To chain or not to chain trade-weighted exchange rate indexes," Working Papers 1996-010, Federal Reserve Bank of St. Louis.
    5. Robert Feinberg & Mieke Meurs, 2005. "Market Reform, Infrastructure and Exchange Rate Passthrough in Central and Eastern Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 17(1), pages 21-32.
    6. Seo, Jeong-Yun, 1998. "Exchange rate and market power in import price," ISU General Staff Papers 1998010108000013522, Iowa State University, Department of Economics.
    7. Tapiwa d. Karoro & Meshach j. Aziakpono & Nicolette Cattaneo, 2009. "Exchange Rate Pass-Through To Import Prices In South Africa: Is There Asymmetry?," South African Journal of Economics, Economic Society of South Africa, vol. 77(3), pages 380-398, September.
    8. Patricia S. Pollard & Cletus C. Coughlin, 2006. "Passthrough Estimates and the Choice of an Exchange Rate Index," Review of International Economics, Wiley Blackwell, vol. 14(4), pages 535-553, September.
    9. Cletus C. Coughlin & Patricia S. Pollard, 2000. "Exchange rate pass-through in U. S. manufacturing: exchange rate index choice and asymmetry issues," Working Papers 2000-022, Federal Reserve Bank of St. Louis.
    10. Thorsten Hens, 1994. "Exchange Rates and Perfect Competition," Discussion Paper Serie A 466, University of Bonn, Germany.
    11. Feinberg, Robert M., 1996. "A simultaneous analysis of exchange-rate passthrough into prices of imperfectly substitutable domestic and import goods," International Review of Economics & Finance, Elsevier, vol. 5(4), pages 407-416.
    12. Chang, Byoung-Ky, 1999. "Three essays on imperfect competition and exchange rate pass-through in the presence of multiple exchange rates," ISU General Staff Papers 1999010108000013554, Iowa State University, Department of Economics.
    13. Oner Guncavdi & Benan Zeki Orbay, 2004. "The Effects of Foreign Exchange Rate Movements on Domestic Prices in the Turkish Manufacturing Industry," EconoQuantum, Revista de Economia y Negocios, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 1(1), pages 41-56, Julio-Dic.
    14. Peter Rowland, 2003. "Exchange Rate Pass-Through To Domestic Prices: The Case Of Colombia," BORRADORES DE ECONOMIA 002683, BANCO DE LA REPÚBLICA.

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