On the Relationship between Pass-Through and Sticky Nominal Prices

Charles Engel ()

No 112004, Working Papers from Hong Kong Institute for Monetary Research

Abstract: The paper draws a link between the conditions for low pass-through when there are flexible prices, and local-currency pricing when there are sticky nominal prices. It shows that the condition under which pass-through is less than one-half when prices are flexible is the same as the condition under which exporting firms set prices in the currency of importing countries when nominal prices must be set in advance.

JEL-codes: F10 F30 F40 (search for similar items in EconPapers)
Date: 2004-06
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