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3 edition of Exchange rate pass-through to U.S. import prices found in the catalog.

Exchange rate pass-through to U.S. import prices

Exchange rate pass-through to U.S. import prices

some new evidence

by

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  • 6 Currently reading

Published by Federal Reserve Board in Washington, D.C .
Written in English


Edition Notes

StatementMario Marazzi ... [et al.].
SeriesInternational finance discussion papers ;, no. 833, International finance discussion papers (Online) ;, no. 833.
ContributionsMarazzi, Mario.
Classifications
LC ClassificationsHG3879
The Physical Object
FormatElectronic resource
ID Numbers
Open LibraryOL3479217M
LC Control Number2005620351

If exporters alter the export prices in their own currency by a proportion smaller than the exchange rate change, then exchange rate pass-through is said to be _____. complete; incomplete When the spot rate ($/€) is and the 'world price' of a bottle of champagne is €15, the quantity demanded of champagne is 10 million bottles. through of exchange rate movements to domestic import prices is important for inflation, American purchasing power, and the pattern of trade between countries. In this article, we present some evidence on the pass-through of the changes in the exchange rate to import prices in the U.S. and abroad, and we discuss some reasons why changes in the. There is a sizeable empirical and theoretical literature that investigates the pass-through of nominal exchange rate fluctuations into import prices and the resulting change in international trade flows. 1. Goldberg and Knetter () provide a broad review of the literature on exchange rate pass Exchange rate pass-through is the degree to which changes in the exchange rate are directly reflected in import prices and domestic inflation, and it varies both between countries and, over time, within countries. 2. When exchange rate pass-through is high, a sudden fall in the exchange rate causes import prices and inflation to rise sharply.

whether there was a structural change in the exchange rate pass-through. Examining import price data for 98 disaggregated SIC industries in the U.S. manufacturing sector and the U.S. import price for all commodities, I find mixed evidence regarding the stability of exchange rate pass-through. JEL codes: F14, F31 Word count: 5,


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Exchange rate pass-through to U.S. import prices Download PDF EPUB FB2

Much has recently been written on exchange rate pass-through to import prices. Olivei () and Marazzi, Sheets, Vigfusson, et al.

() have examined the exchange rate sensitivity of U.S. import prices; Otani, Shiratsuka, and Shirota (, ) have looked at exchange rate. Abstract: This paper documents a sustained decline in exchange rate pass-through to U.S. import prices, from above during the s to somewhere in the neighborhood of during the last decade.

This decline in the pass-through coefficient is robust to the measure of foreign prices that is included in the regression (i.e., CPI versus PPI), whether the estimation is done in levels or.

run and 40 percent over the longer run. Corresponding rates of pass-through into German import prices are approximately 60 percent in the short run and 80 percent in the long run. What explains differences across countries in exchange rate pass through into import prices. A promising recent direction of research supplements the earlier.

This paper documents a sustained decline in exchange rate pass-through to U.S. import prices, from above during the s to somewhere in the neighborhood of during the last decade. exchange rate pass-through to import and export prices.

In the baseline versions based on preset prices, PCP implies that the pass-through (the elasticity of the price in home currency with respect to the exchange rate) equals one for import prices and zero for export prices.

These implications are reversed under LCP. There continues to be much interest in understanding the mechanism that determines the exchange rate pass-through to import and export prices.

A key issue is what role is played by nominal rigidities and currency choice (for setting the price of traded goods) in determining the behavior of import and export prices relative to the exchange by: bilateral exchange-rate pass-through were for imports fro m Canada ) and the EU ), and the lowest for imports from Japan ) and the NIEs ().

An exchange-rate pass-through was also estimated for U.S. import prices from China for a small number of observations from mid tothe period when the yuan fluctuated against the.

Economists have noted that the pass-through of exchange-rate changes to import prices, both in the United States and in many other countries, has declined over the past 40 years. They attribute this trend in large part to a decline in global inflation, which has bolstered central-bank credibility and has lessened exchange-rate : Owen F.

Humpage, Timothy Stehulak. priced in dollars and in non-dollars separately. We then estimate pass-through from the exchange rate shock into prices over time. We flnd that there is a large difierence in pass-through into U.S. import prices of the average good priced in dollars versus the average good priced in non-dollars at all horizons up to 24 months.

Downloadable (with restrictions). We study firm-level pricing behavior through the lens of exchange rate pass-through and provide new evidence on how firm-level market shares and price complementarities affect pass-through decisions.

Using U.S. import price micro data, we identify two facts: First, exactly the firms that react the most with their prices to changes in their own costs are also. In a panel spanning the period from to and including up to manufacturing sectors, import price changes of Chinese goods pass into U.S.

producer prices at an average rate ofwhile import price changes that can be traced back to exchange rate movements of other trade partners only have mild effects on U.S. prices.

Formally, exchange-rate pass-through is the elasticity Exchange rate pass-through to U.S. import prices book local-currency import prices with respect to the local-currency price of foreign currency.

It is often measured as the percentage change, in the local currency, of import prices resulting from a one percent change in the exchange rate between the exporting and importing countries.

[1]. rate pass-through in s of tobacco from Brazil (Pompelli and Pick, )iexportsofrice(Yumkella,Unnevehr,andGarcia,). Morerecently,Miljkovic,Brester,andMarsh()foundincompleteexchange rate pass-through for U.S. beef, pork, and poultry export prices for several.

depreciation of the Canadian dollar vis-a-vis the U.S. dollar since late This paper provides a broad overview of the various mechanisms by which exchange rate movements pass through to consumer prices and discusses the implications of exchange rate Cited by: 3. I present a sticky-wage model of exchange rate pass-through with heterogeneous producers and endogenous markups.

The model shows that low levels of exchange rate pass-through to rm- and aggregate-level import prices coexist with large movements in trade ows. After an exchange rate shock, aggregate import prices are subject to a composition bias.

Although exchange rate pass-through into import prices is often assumed to be symmetric to appreciations and depreciations, we show that foreign currency appreciations pass through faster than foreign currency depreciations into product-level U.S.

import prices. Exchange-Rate Pass-Through to Import Prices in the Euro Area José Manuel Campa, Linda S. Goldberg, José M. González-Mínguez.

NBER Working Paper No. Issued in September NBER Program(s):International Finance and Macroeconomics This paper presents an empirical analysis of transmission rates from exchange rate movements to import prices, across countries and Cited by: Short-run pass-through into the import price index is a combination of the fraction of firms changing prices and desired pass-through.

In the next sub-section we explore the role of the currency in which prices are set on ERPT. Currency of Pricing and Exchange Rate Pass-through. Most countries import goods that are priced in multiple Cited by: Exchange-Rate Pass-Through to Import Prices.

U.S. consumers often will not see the full percentage of a dollar depreciation reflected in dollar-denominated import prices.

How much of the exchange-rate depreciation eventually gets passed through to dollar import prices depends on myriad industry-specific things that influence the Cited by: 5. The recent decrease in the responsiveness of U.S.

import prices to exchange rates can be explained by the entry of these new exporters. This paper finds support for this explanation by testing another implication of this type of heterogeneous firm model: lower exchange rate pass-through for goods that are traded for short periods of by: 6.

pass-through from exchange rates to import prices. In practice, many U.S. import prices tend to rise by only around 1/2 of a typical dollar depreciation over the following year.

Exchange rate pass-through to U.S. import prices: some new evidence. Jon Faust, Joseph Gagnon, Mario Marazzi, Jaime R. Marquez, Robert Martin (), Trevor A. Reeve, John Rogers (), Nathan Sheets and Robert Vigfusson (). NoInternational Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.) Abstract: This paper documents a sustained decline in exchange rate Cited by: Much of the literature on exchange rate pass-through has focused on pass-through to a single price variable (such as import, pro-ducer or consumer prices) and on di erences between countries or industries.

Campa and Goldberg () use a single equation ap-proach to estimate pass-through to import prices for a sample of OECD countries, nding. 8 Jaehwa Lee, Exchange Rate Pass-Through into Export and Import Prices: Bounds Testing Analysis of the Case of Korea, The Journal of International Trade & Commerce,10, 2, CrossRef 9 Janine Aron, Introduction to a Special Section on ‘Exchange Rate Pass-through in Developing and Emerging Markets’, The Journal of Development Studies.

Keywords: Exchange Rate Pass-Through, U.S. Import Prices, Market Structure, Price Com-plementarities. This research was conducted with restricted access to the Bureau of Labor Statistics (BLS) data. The views expressed here are those of the authors and do not necessarily reflect the views of the BLS or the Swiss National Bank.

The analysis of exchange rate pass-through is conducted in two stages. First, it seeks to establish the degree to which Australian dollar (AUD) import prices of total manufactures and 50 product categories contained therein have responded to the massive fluctuations in the AUD during the : Springer-Verlag Berlin Heidelberg.

[] “ Declining Exchange Rate Pass-Through to U.S. Import Prices: The Potential Role of Global Factors ” Journal of International Money and Finance – Crossref, Google Scholar; Masha, Iyabo, and C. Park. [] “ Exchange Rate Pass Through to Prices in Maldives ” International Monetary Fund Working Paper, WP/12/, May.

evidence on exchange rate pass-through into the import prices of 25 OECD countries. Using quarterly data from throughwe document the prevalence of PCP and LCP in short-run and long-run pass-through elasticities.

We use an economically meaningful estimation approach, meaning that we estimate pass-through rates after controlling for. A well-known result of the exchange rate pass-through literature is that a change in the exchange rate is less than fully reflected in import prices. As summarized by Goldberg and Knetter (), studies indicate that pass-through for aggregate U.S.

import prices is centered on 60 percent. MOVEMENTS IN the exchange rate of the dollar are now widely perceived to have less impact on U.S. import prices than they had at the beginning of this decade. If that perception is accurate, a.

Trade Integration, Competition, and the Decline in Exchange-Rate Pass-Through⁄ Christopher Gusty, Sylvain Leduc, and Robert J. Vigfusson Federal Reserve Board January Abstract Over the past twenty years, U.S.

import prices have become less responsive to the exchange rate. We propose that this decline is a result of increased trade. and Competition Between Floaters and Fixers by Paul R.

Bergin Robert C. Feenstra University of California, Davis and NBER April Abstract This paper studies how a rise in the share of U.S. imports from China, or any country with a fixed exchange rate, could disproportionately lower pass-through of exchange rates to U.S.

import prices. Impulse response function reveals a persistent and incomplete pass-through for both exchange rates and oil prices i.e. and for Canada and and for the U.S. That is, greater pass-through exist in an economy which has a more oil import share, more volatile monetary policy, and higher inflation : Eiman Aiyash.

A major challenge for monetary policy is predicting how exchange rate movements will impact inflation. This column explains why rules of thumb could be misleading and proposes a new approach that incorporates the source of exchange rate movements when evaluating how they pass through to import prices and inflation.

exchange rate pass-through in nine developed countries and concludes that exchange rates “have not assumed a bigger role in domestic consumer price inflation in recent years, and may even have had a smaller role.” 3 For a survey of the literature on the exchange rate pass-through to import prices, see Goldberg and Knetter ().File Size: KB.

Exchange Rate Pass-Through When Market Share Matters Kenneth A. Froot, Paul Klemperer. NBER Working Paper No. (Also Reprint No. r) Issued in March NBER Program(s):International Trade and Investment, International Finance and Macroeconomics We investigate pricing to market when the exchange rate changes in cases where firms' future demands depend on their current market Cited by:   The interest in exchange rate pass-through (ERPT) in developing and emerging market (DEM) countries has burgeoned in the last two decades.

By contrast, in the earlier comprehensive empirical survey of ERPT by Menon (), the majority of studies covered industrialised countries – largely the US, Japan and European countries – with only a handful of less developed countries.

pass-through into import prices for a panel of 24 developing countries using aggregate data and finds that the differences in pass-through are due to three macroeconomic determinants: exchange rate regimes, trade barriers, and.

The appreciation of sterling that began in appeared to pass through into import prices very slowly, an apparent example of incomplete exchange rate pass-through. Incomplete pass-through has typically been explained by a combination of sticky prices and pricing to by: to a large but volatile pass-through to import prices and overall very small pass-through to consumer in⁄ation in the euro area.

Keywords: Exchange rate pass-through, import prices, consumer prices, in⁄ation, bayesian vector autoregression. JEL Codes: E31, F3, F (&%:RUNLQJ3DSHU -DQXDU\. 2 2 Survey of the literature Theoretical considerations According to Goldberg and Knetter () exchange rate pass-through is defined as “the percentage change in local currency import prices resulting from a one percentFile Size: KB.This study analyses the exchange rate pass-through into German import prices based on disaggregated data taken on a monthly basis between and Discussion on Policy-Relevant Exchange Rate Pass-Through to U.S.

Import Prices Hakan Yilmazkuday1 1Temple University September Hakan Yilmazkuday - Temple University (Discussion on Pass-Through1Temple University) September 1 / 9.