On the link between distribution's margins and exchange rates: the role of globalization

Cédric Durand and Antonia Lòpez-Villavicencio ()
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Antonia Lòpez-Villavicencio: CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique

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Abstract: In this paper, we analyze the differences in the sensibility of the distribution and transportation margin to exchange rate variations among different sectors in several European countries between 1995 and 2007. On the one hand, we provide new evidence that the margin reacts to exchange rate movements, a fact that may help to explain the still unresolved puzzle concerning the incomplete pass-through of the exchange rate to consumer prices. On the other hand, we look for indications of the characteristics of global value chains governance through the evolution of distributional margins. In addition, in order to draw more subtle conclusions, one original feature of this work is that we empirically allow for asymmetrical reactions of distributional margins to depreciations or appreciation, an effect that was previously ignored in the literature.

Keywords: Distribution's margin; globalization; asymmetries; exchange rate (search for similar items in EconPapers)
Date: 2011-05-20
New Economics Papers: this item is included in nep-hme and nep-opm
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