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Import Price Rigidity and Invoice Currency in Russia

Author

Listed:
  • Pleskachev, Yury

    (Russian Presidential Academy of National Economy and Public Administration)

  • Ponomarev, Yury

    (Gaidar Institute for Economic Policy)

Abstract

This paper examines the relationship between the import price rigidity and the invoice currency of goods imported to Russia. Microdata on the import of goods to Russia over a period from 2002 to 2015 allowed to assess the degree of price rigidity to the exchange rate fluctuations at a disaggregated level, which is the first time this kind of research was applied to the Russian economy. The empirical estimates of prices of goods denominated in different currencies are in line with similar results available in the world literature on price rigidity and exchange rate pass-through. According to panel data analysis, prices of imported goods denominated in domestic currency (Russian ruble) show little reaction to exchange rate fluctuations, while prices of imported goods denominated in foreign currency (US dollar, euro) almost completely copy the dynamics of exchange rate movements. This paper also documents sector-dependent differences of influence of the invoice currency on the degree of the imported goods price rigidity to fluctuations in the exchange rate. Some imported goods denominated in Russian ruble do not show complete price rigidity to exchange rate fluctuations, for example, products of plant origin, textiles, and headgear. Deviation from zero rigidity to the exchange rate shocks for imported goods denominated in foreign currencies is observed only for fats and oils of animal or vegetable origin.

Suggested Citation

  • Pleskachev, Yury & Ponomarev, Yury, 2017. "Import Price Rigidity and Invoice Currency in Russia," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 80-99, June.
  • Handle: RePEc:rnp:ecopol:ep1733
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    References listed on IDEAS

    as
    1. Nidhaleddine Ben Cheikh & Christophe Rault, 2016. "Recent estimates of exchange rate pass-through to import prices in the euro area," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 69-105, February.
    2. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February.
    3. Auer, Raphael A. & Schoenle, Raphael S., 2016. "Market structure and exchange rate pass-through," Journal of International Economics, Elsevier, vol. 98(C), pages 60-77.
    4. Choudhri, Ehsan U. & Hakura, Dalia S., 2015. "The exchange rate pass-through to import and export prices: The role of nominal rigidities and currency choice," Journal of International Money and Finance, Elsevier, vol. 51(C), pages 1-25.
    5. Janine Aron & Ronald Macdonald & John Muellbauer, 2014. "Exchange Rate Pass-Through in Developing and Emerging Markets: A Survey of Conceptual, Methodological and Policy Issues, and Selected Empirical Findings," Journal of Development Studies, Taylor & Francis Journals, vol. 50(1), pages 101-143, January.
    6. Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
    7. Gita Gopinath & Oleg Itskhoki & Roberto Rigobon, 2010. "Currency Choice and Exchange Rate Pass-Through," American Economic Review, American Economic Association, vol. 100(1), pages 304-336, March.
    8. repec:mes:prectr:v:58:y:2016:i:1:p:54-72 is not listed on IDEAS
    9. Haroon Mumtaz & Özlem Oomen & Jian Wang, 2011. "Exchange rate pass-through into U.K. import prices: evidence from disaggregated data," Staff Papers, Federal Reserve Bank of Dallas, issue June.
    10. Iu. Ponomarev & P. Trunin & A. Ulyukaev, 2016. "Exchange Rate Pass-Through in Russia," Problems of Economic Transition, Taylor & Francis Journals, vol. 58(1), pages 54-72, January.
    11. Brun-Aguerre, Raphael & Fuertes, Ana-Maria & Phylaktis, Kate, 2012. "Exchange rate pass-through into import prices revisited: What drives it?," Journal of International Money and Finance, Elsevier, vol. 31(4), pages 818-844.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    price rigidity; exchange rates; pass-through; prices of imported goods; inflation.;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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