Jose M. Campa () and Linda S. Goldberg ()
Additional contact information
Jose M. Campa: IESE Business School, Postal: IESE Business School. Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Linda S. Goldberg: Federal Reserve Bank of New York
Abstract: Exchange rate regime optimality,as well as monetary policy effectiveness,depends on the tightness of the link between exchange rate movements and import prices.Recent debates hinge on whether producer-currency pricing (PCP)or local-currency pricing (LCP) of imports is more prevalent,and on whether exchange rate pass-through rates are endogenous to a country 's macroeconomic conditions.We provide cross-country and time series evidence on both of these issues for the imports of twenty-five OECD countries. Across the OECD,and especially within manufacturing industries,there is compelling evidence of partial pass-through in the short-run rejecting both PCP and LCP. Over the long run,PCP is more prevalent for many types of imported goods.Higher inflation and exchange rate volatility are weakly associated with higher pass-through of exchange rates into import prices. However, for OECD countries,the most important determinants of changes in pass-through over time are microeconomic and relate to the industry composition of a country 's import bundle.
Keywords: Producer currency pricing; imports; monetary policy
29 pages, October 15, 2002
Full text files
DI-0475-E.pdf
Questions (including download problems) about the papers in this series should be directed to Noelia Romero ()
Report other problems with accessing this service to Sune Karlsson ().
This page generated on 2024-02-05 15:47:28.