The Impact of Domestic Market Structure on Exchange Rate Pass-through PDF Download

Author: Ahmed H. Mohamed
Publisher:
ISBN:
Category : Foreign exchange
Languages : en
Pages : 56

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Author: Mohamed
Publisher:
ISBN:
Category : Foreign exchange rates
Languages : en
Pages : 56

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Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1513573691
Category : Business & Economics
Languages : en
Pages : 34

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Book Description
Determining the magnitude and speed of the exchange rate passthrough (ERPT) to inflation has been of paramount importance for policy-makers in developed and emerging economies. This paper estimates the exchange rate passthrough in Mozambique using econometric techniques on a sample spanning from 2001 to 2019. Results suggest that the ERPT is assymetric, sizable and fast, with 50 percent of the exchange rate variations passing through to prices in less than six months. Policy-makers should continue to pursue low and stable inflation and develop a strong track record of prudent macroeconomic policies for the ERPT to decline.

Author: Raphael Auer
Publisher:
ISBN:
Category : Exchange rate pass-through
Languages : en
Pages : 0

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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 micro-data from U.S. import prices, we identify two facts: First, exactly the firms that react the most with their prices to changes in their own costs are also the ones that react the least to changing competitor prices. Second, the response of import Prices to exchange rate changes is U-shaped in market share while it is hump-shaped in response to competitor prices. We show that both facts are consistent with a model based on Dornbusch (1987) that generates variable markups through a nested-CES demand system. Finally, based on the model, we find that direct cost pass-through and price complementarities play approximately equally important roles in determining pass-through but also partly offset each other. This suggests that equilibrium feedback effects in pricing are large. Omission of either channel in an empirical analysis results in a failure to explain how market structure affects price-setting in industry equilibrium.

Author: Stephen Martin
Publisher:
ISBN:
Category : Foreign exchange rates
Languages : en
Pages : 52

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Author: Ehsan U. Choudhri
Publisher: International Monetary Fund
ISBN: 1475510233
Category : Business & Economics
Languages : en
Pages : 34

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Using both regression- and VAR-based estimates, the paper finds that the exchange rate pass-through to import prices for a large number of countries is incomplete and larger than the pass-through to export prices. Previous studies have reported similar results, which give rise to the puzzle that while local currency pricing is needed to account for incomplete import price pass-through, it would not imply a lower export price pass-through. Recent explanations of this puzzle have emphasized markup adjustment in response to exchange rate changes. This paper suggests an alternative explanation based on the presence of both producer and local currency pricing. Using a dynamic general equilibrium model, the paper shows that a mix of producer and local currency pricing can explain the pass-through evidence even with a constant markup. The model can also explain the observed exchange rate and inflation variability as well as the fact that the regression and VAR estimates tend to be similar.

Author: P. Karadeloglou
Publisher: Springer
ISBN: 0230582699
Category : Business & Economics
Languages : en
Pages : 255

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This book looks at the PPP persistence puzzle, and econometric aspects of exchange rate dynamics and their implications. It also explores the importance of exchange rate dynamics in the pass-through effects (PTE) and the econometric aspects of the exchange rates dynamics linked to structural shocks on different economies.

Author: Ahmed H. Mohamed
Publisher:
ISBN:
Category : Foreign exchange rates
Languages : en
Pages : 56

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Author: Ila Patnaik
Publisher: International Monetary Fund
ISBN: 1455211834
Category : Business & Economics
Languages : en
Pages : 27

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Some emerging economies have a relatively ineffective monetary policy transmission owing to weaknesses in the domestic financial system and the presence of a large and segmented informal sector. At the same time, small open economies can have a substantial monetary policy transmission through the exchange rate channel. In order to understand this setting, we explore a unified treatment of monetary policy transmission and exchangerate pass-through. The results for an emerging market, India, suggest that the most effective mechanism through which monetary policy impacts inflation runs through the exchange rate.

Author: Ronald MacDonald
Publisher: Routledge
ISBN: 1134838220
Category : Foreign exchange
Languages : en
Pages : 334

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Book Description
''In summary, the book is valuable as a textbook both at the advanced undergraduate level and at the graduate level. It is also very useful for the economist who wants to be brought up-to-date on theoretical and empirical research on exchange rate behaviour.'' ""Journal of International Economics""