Invoice currencies, import prices, and inflation
This paper uses the structural VAR approach to examine the interactive responses between import prices and domestic prices in Japan before and after the 1990s. First, the estimation reveals that the Japanese domestic prices have become a little more vulnerable to foreign inflationary pressure through a rise in contract import prices. Second, Japan after the 1990s can pass along its domestic inflationary pressure to foreign countries with an increase in the pricing of its domestic products. Third, the results confirm that Japan’s exchange rate pass-through effect on its domestic prices has decreased, as suggested by other literature.
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- Sven W. Arndt & J. David Richardson, 1987. "Real-Financial Linkages Among Open Economies," NBER Working Papers 2230, National Bureau of Economic Research, Inc.
- Laurence M. Ball, 2006. "Has Globalization Changed Inflation?," NBER Working Papers 12687, National Bureau of Economic Research, Inc.
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