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Pass-through of imported input prices to domestic producer prices: evidence from sector-level data

Author

Listed:
  • Ahn JaeBin

    () (International Monetary Fund, Washington, DC, USA)

  • Park Chang-Gui
  • Park Chanho

    (Bank of Korea, Seoul, Korea (the Republic of))

Abstract

Motivated by stylized facts pointing to a dominant role of imported inputs in transmitting external price shocks to domestic prices, this paper zooms in to study the pass-through of imported input costs to domestic producer prices. Our approach constructs effective input price indices from sector-level price data combined with sector-level information on input-output linkages. Applying an error correction model specification to sector-level output and input prices, the long-run pass-through rate of effective imported input costs to domestic producer prices is estimated to be around 70 percent in Korea and almost 100 percent in selected European countries.

Suggested Citation

  • Ahn JaeBin & Park Chang-Gui & Park Chanho, 2017. "Pass-through of imported input prices to domestic producer prices: evidence from sector-level data," The B.E. Journal of Macroeconomics, De Gruyter, vol. 17(2), pages 1-14, June.
  • Handle: RePEc:bpj:bejmac:v:17:y:2017:i:2:p:14:n:9
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    More about this item

    Keywords

    exchange rate pass-through; imported input cost pass-through; inflation;

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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