IDEAS home Printed from https://ideas.repec.org/a/eee/japwor/v20y2008i2p290-301.html
   My bibliography  Save this article

Exchange rate and pricing behavior: Comparison of Taiwan with Japan for manufacturing industries

Author

Listed:
  • Tsui, Hsiao-Chien

Abstract

This paper investigates a theoretical model that explains the relationship between exchange rate and profit when it takes the effect of exchange rate on both input and output prices into account. Using the panel data of 19 two-digit Taiwanese and 17 two-digit Japanese manufacturing industries over the period of 1984-1994, the empirical evidence shows that a higher degree of net external exposure in Taiwan than it in Japan. The empirical results also suggest that an appreciation of home currency, industries of Taiwan take advantage of the appreciation of the New Taiwan dollar, enjoying a reduction in the price of imported inputs into production. As far as this study shows, however, the merit to imported inputs of a strong Japanese Yen has not been confirmed in Japan.

Suggested Citation

  • Tsui, Hsiao-Chien, 2008. "Exchange rate and pricing behavior: Comparison of Taiwan with Japan for manufacturing industries," Japan and the World Economy, Elsevier, vol. 20(2), pages 290-301, March.
  • Handle: RePEc:eee:japwor:v:20:y:2008:i:2:p:290-301
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0922-1425(06)00080-6
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kenneth A. Froot & Michael Kim & Kenneth Rogoff, 1995. "The Law of One Price Over 700 Years," NBER Working Papers 5132, National Bureau of Economic Research, Inc.
    2. Campa, Jose Manuel & Goldberg, Linda S, 1999. "Investment, Pass-Through, and Exchange Rates: A Cross-Country Comparison," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 287-314, May.
    3. Jose Manuel Campa & Linda S. Goldberg, 2002. "Exchange rate pass-through into import prices: a macro or micro phenomenon?," Staff Reports 149, Federal Reserve Bank of New York.
    4. Pinelopi Koujianou Goldberg & Michael M. Knetter, 1997. "Goods Prices and Exchange Rates: What Have We Learned?," Journal of Economic Literature, American Economic Association, pages 1243-1272.
    5. Marston, Richard C., 1990. "Pricing to market in Japanese manufacturing," Journal of International Economics, Elsevier, pages 217-236.
    6. Rebecca Hellerstein, 2004. "Who Bears the Cost of a Change in the Exchange Rate?," Econometric Society 2004 North American Summer Meetings 589, Econometric Society.
    7. Kadiyali, Vrinda, 1997. "Exchange rate pass-through for strategic pricing and advertising: An empirical analysis of the U.S. photographic film industry," Journal of International Economics, Elsevier, pages 437-461.
    8. Athukorala, Premachandra & Menon, Jayant, 1994. "Pricing to Market Behaviour and Exchange Rate Pass-Through in Japanese Exports," Economic Journal, Royal Economic Society, vol. 104(423), pages 271-281, March.
    9. Goldberg, Linda S., 1990. "Measuring External Openness: The Index Of Effective Exposure," Working Papers 90-19, C.V. Starr Center for Applied Economics, New York University.
    10. Froot, Kenneth A & Klemperer, Paul D, 1989. "Exchange Rate Pass-Through When Market Share Matters," American Economic Review, American Economic Association, pages 637-654.
    11. Clarida, Richard H, 1997. "The Real Exchange Rate and US Manufacturing Profits: A Theoretical Framework with Some Empirical Support," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 2(3), pages 177-187, July.
    12. Otani, Akira & Shiratsuka, Shigenori & Shirota, Toyoichiro, 2006. "Revisiting the Decline in the Exchange Rate Pass-Through: Further Evidence from Japan's Import Prices," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 24(1), pages 61-75, March.
    13. Campa, Jose & Goldberg, Linda S., 1995. "Investment in manufacturing, exchange rates and external exposure," Journal of International Economics, Elsevier, pages 297-320.
    14. Doi, Noriyuki, 1991. "Aggregate Export Concentration in Japan," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 433-438, June.
    15. Dornbusch, Rudiger, 1987. "Exchange Rates and Prices," American Economic Review, American Economic Association, pages 93-106.
    16. Shinjo Koji, 1993. "Exchange Rate Changes and Pricing Behavior of Japanese Firms: A Cross-Section Analysis," Journal of the Japanese and International Economies, Elsevier, pages 157-174.
    17. Betts, Caroline & Devereux, Michael B., 2000. "Exchange rate dynamics in a model of pricing-to-market," Journal of International Economics, Elsevier, pages 215-244.
    18. Dornbusch, Rudiger, 1987. "Exchange Rates and Prices," American Economic Review, American Economic Association, pages 93-106.
    19. Froot, Kenneth A & Klemperer, Paul D, 1989. "Exchange Rate Pass-Through When Market Share Matters," American Economic Review, American Economic Association, pages 637-654.
    Full references (including those not matched with items on IDEAS)

    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:eee:japwor:v:20:y:2008:i:2:p:290-301. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/inca/505557 .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.