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Exchange-rate pass-through at the product level

  • Guillaume Gaulier
  • Amina Lahrèche-Révil
  • Isabelle Méjean

We use a detailed database to investigate exchange-rate pass-through at the product level for a large number of countries. The empirical analysis suggests that pricing behaviours are dichotomous, with complete pass-through in around 25% of sectors and significant pricing-to-market in the remaining ones. Average long-run pass-through coefficient is close to 80%; this result hides a strong heterogeneity of pass-through behaviours across sectors. Even when composition effects are controlled for, average pass-through varies across importing countries. The econometric analysis shows that pass-through tends to be higher in volatile environments; in less developed countries; in weakly integrated markets.

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Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 41 (2008)
Issue (Month): 2 (May)
Pages: 425-449

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Handle: RePEc:cje:issued:v:41:y:2008:i:2:p:425-449
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  19. Gross, Dominique M. & Schmitt, Nicolas, 2000. "Exchange rate pass-through and dynamic oligopoly: an empirical investigation," Journal of International Economics, Elsevier, vol. 52(1), pages 89-112, October.
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  22. Jiawen Yang, 1992. "Exchange Rate Pass-Through in U.S. Manufacturing Industries," Working Papers 92-28, New York University, Leonard N. Stern School of Business, Department of Economics.
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