The pass-through of exchange rate changes to import prices

Uwe Ketelsen and Mika Kortelainen

No 26/1996, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: In this paper, we analyze the empirical relevance of exchange rate pass-through for Finland, Sweden and Denmark during the period 1980-1994.Further, we attemp to determine if there has been a structural change in the pass-through relationship in 1990s.We find that about half the changes in exchange rates and world prices are passed through to import prices within one year, and three-quarters of such changes are passed through to import prices in two years.Moreover, there are no major differences among countries.Parameter constancy tests indicate the possibility of a structural change where the pass-through has slowed in recent years.Possible explanations of this are that the exchange rate regime has changed and competition has increased.

Keywords: exchange rate pass-through; import prices; structural change (search for similar items in EconPapers)
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp1996_026

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