Foreign exchange volatility and international pricing
This paper explores the hypothesis that the unresponsiveness of export pricing to exchange rate fluctuations may be partially the result of hedging activities by trading agents due to foreign exchange volatility (EV) to eliminate exchange risk. In essence, hedging against foreign exchange uncertainty affects the structure of pass-through relationship. The exchange rate pass-through issue is governed by a firm-specific factor like hedging, in addition to market share, product differentiation and market structure. A reduction in exchange risk exposure leads to a decline in the willingness rather than the ability to pass the cost shock to consumers. The estimation of foreign EV dummy interacting with one-year-lagged exchange rate on export pricing supports the hypothesis that there is a significant differential impact of high- and low-EV destinations on the degree of pass-through which, in turn, affects international pricing.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 3 (2011)
Issue (Month): 4 ()
|Contact details of provider:|| Web page: http://www.inderscience.com/browse/index.php?journalID==310|
When requesting a correction, please mention this item's handle: RePEc:ids:ijecbr:v:3:y:2011:i:4:p:357-370. 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: (Darren Simpson)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.