IDEAS home Printed from https://ideas.repec.org/a/bla/reviec/v8y2000i2p235-251.html
   My bibliography  Save this article

Exchange Rate Pass‐Through in Vertically Related Markets

Author

Listed:
  • Yunus Aksoy
  • Yohanes E. Riyanto

Abstract

The paper provides a theoretical framework which addresses exchange rate pass‐through within the setting of vertically related markets. In particular, foreign firms’ price adjustment in response to an exchange rate shock is evaluated. This permits study of the importance of cost effects of the exchange rate shock. Recent empirical evidence indicated the relevance of these cost effects. It is shown that one can decompose the effects of an exchange rate shock on the final goods market into direct and indirect components. The indirect effect works through the input market. The degree of pass‐through then depends on the relative importance of direct and indirect effects, which in turn depends on the nature of vertical structures and strategic firm behavior. It is shown that the institutional aspects of vertically related markets play a role in explaining incomplete price adjustments in both intermediate and final goods markets and the failure of PPP in the short run.

Suggested Citation

  • Yunus Aksoy & Yohanes E. Riyanto, 2000. "Exchange Rate Pass‐Through in Vertically Related Markets," Review of International Economics, Wiley Blackwell, vol. 8(2), pages 235-251, May.
    • Handle: RePEc:bla:reviec:v:8:y:2000:i:2:p:235-251
    DOI: 10.1111/1467-9396.00218
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-9396.00218
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-9396.00218?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dario Fauceglia & Anirudh Shingal & Martin Wermelinger, 2014. "Natural Hedging of Exchange Rate Risk: The Role of Imported Input Prices," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 150(IV), pages 261-296, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:reviec:v:8:y:2000:i:2:p:235-251. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.