Differences in Exchange Rate Pass-Through in the Euro Area

Jose Campa and González Mìnguez, Jose Manuel

No 4389, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This Paper focuses on the pass-through of exchange rate changes into the prices of imports made by euro area countries originating outside the area. Using data on import unit values for 13 different product categories for each country, we estimate industry-specific rates of pass-through across and within countries for all euro members. In the short run, pass-through rates differ across industries and countries and are less than one. In the long run neither full pass-through nor equality of pass-through rates across industries and countries can be rejected. Differences exist across euro area countries in the degree that a common exchange rate movement gets transmitted into consumer prices and costs of production indices. Most of these differences in transmission rates are due to the distinct degree of openness of each country to non-euro area imports rather than to the heterogeneity in the structure of imports.

Keywords: exchange rate; Pass-through; Euro; Monetary union (search for similar items in EconPapers)
JEL-codes: F31 F36 F42 (search for similar items in EconPapers)
Date: 2004-05
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Differences in exchange rate pass-through in the euro area (2006)
Working Paper: Differences in exchange rate pass-through in the euro area (2002)
Working Paper: Differences in exchange rate pass-through in the euro area (2002)
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