Exchange Rate Pass-Around

Federico Trionfetti, Julien Jinz () and Matthieu Crozet
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Julien Jinz: Bielefeld University and Kiel Institute for the World Economy., https://julianhinz.com/

No 2412, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: The strongest empirical regularity about the exchange rate pass-through is that it is incomplete. We provide a new theoretical explanation based on the unwillingness of some firms to price discriminate between markets. These firms set a single price to all destinations and adjust it when the exchange rate shock occurs. But the adjustment is not necessarily proportional since the change in the single price affects revenues in all markets. The single price strategy also implies a "pass-around" effect: The exchange rate shock has repercussions of price changes to all export markets. The analysis of price changes operated by French exporters in different markets after the EUR/CHF shock of 2015 provides evidence in favour of our theoretical explanation.

Keywords: Exchange rate pass-through; international trade; Pricing-to-market (search for similar items in EconPapers)
JEL-codes: F14 F31 F61 F62 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2024-04
New Economics Papers: this item is included in nep-int, nep-mon and nep-opm
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Related works:
Working Paper: Exchange Rate Pass-Around (2023)
Working Paper: Exchange rate pass-around (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:2412

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