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The Exchange Rate Pass-through into Import Prices: The Case of Japanese Meat Imports

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  • Miljkovic, Dragan
  • Zhuang, Renan

Abstract

The effect of exchange rate pass-through on import prices is a question of significant interest to many nations and especially those with permanent trade deficit. Japan is traditional net importer of food products in general and meat products including beef, pork, and poultry in particular. Most of the Japanese meat imports come from a few countries thus making Japan potentially very sensitive to the swings in one or a few bilateral exchange rates. This was the motivation to estimate the exchange rate pass-through effect on meat import prices in Japan. Interestingly, results for different meats differ substantially. For instance, poultry import prices indicate almost complete exchange rate pass-through, while beef import prices indicate partial (relatively high) exchange rate pass-through. Import prices of pork, on the other hand, indicate zero exchange rate pass-through. In terms of competitiveness, these results suggest almost perfectly competitive markets among poultry importing firms, somewhat competitive markets among beef importing firms, and a high degree of market power among the pork importing firms. One of the key contributions of this paper is the use of the meats imports weighted exchange rates in the analysis. The standard practice in previous agricultural trade studies related to either exchange rate pass-through or pricing to market was to use the aggregate trade weighted exchange rates usually provided by the Central Bank authorities or sources. Our approach is novel and is due to recommendations from Goldberg (2004) and Pollard and Coughlin (2006).

Suggested Citation

  • Miljkovic, Dragan & Zhuang, Renan, 2007. "The Exchange Rate Pass-through into Import Prices: The Case of Japanese Meat Imports," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9967, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea07:9967
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    Cited by:

    1. Varma, Poornima & Issar Akash, 2017. "India's Horticulture Sector - A Port- Level Analysis of Onion Export Pricing," IIMA Working Papers WP2017-03-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
    2. Onji, Kazuki, 2014. "The price disparity analysis revisited: An application to pork imports in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 34(C), pages 1-23.
    3. Kazuki Onji, 2009. "A tale of pork prices : evasion and attenuation of a Japanese tariff," Trade Working Papers 22883, East Asian Bureau of Economic Research.
    4. Poornima Varma & Akash Issar, 2016. "Pricing to market behaviour of India's high value agri-food exporters: an empirical analysis of major destination markets," Agricultural Economics, International Association of Agricultural Economists, vol. 47(1), pages 129-137, January.
    5. Kazuki Onji, 2009. "A Tale of Pork Prices: Evasion and Attenuation of a Japanese Tariff," Asia Pacific Economic Papers 382, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.

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    Keywords

    International Relations/Trade;

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