Exchange rate and inflation: a neo-structuralist approach for Brazilian manufacturing sectors (2010–2019)

Hugo Carcanholo Iasco Pereira and Fabrício José Missio

Journal of Post Keynesian Economics, 2024, vol. 47, issue 3, 589-628

Abstract: The objective of this article is twofold. The first goal is to comprehend the effect of changes in the exchange rate on prices using a neo-structuralist approach. Our theoretical model showed that the greater the share of imported inputs in costs, the more powerful the pass-through. Furthermore, considering the structuralist notion of neutral inflation, the model also indicated that the exchange rate pass-through of sectors with a small (great) share of salaries in costs is less (more) sensitive to salary changes. Also, the model was extended to endogenize the exchange rate pass-through on prices in relation to the effects of a regime of real exchange rate oriented to economic development on the markup rate and the productive structure. The second goal of the article is to provide time-series evidence on the exchange rate pass-through in prices across different manufacturing sectors of the Brazilian economy over the 2010–2019 period. Empirical results delivered evidence that pass-through is partial and varies across sectors. Moreover, the empirical findings confirmed our theoretical results insofar as sectoral differences of pass-through are associated with the markup rate, the degree of outward orientation, the competition between firms, and the share of imported inputs of each sector.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/01603477.2024.2318743 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:postke:v:47:y:2024:i:3:p:589-628

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MPKE20

DOI: 10.1080/01603477.2024.2318743

Access Statistics for this article

More articles in Journal of Post Keynesian Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().