The Degree and Determinants of Exchange Rate Pass-through: Market Structure, Non-tariff Barriers and Multinational Corporations

Jayant Menon ()

Economic Journal, 1996, vol. 106, issue 435, 434-44

Abstract: This study investigates the exchange rate pass-through for Australian imports of manufactures. Pass-through elasticities are estimated for total manufactures and forty product categories by applying an econometric procedure which avoids the pitfalls in previous studies to a carefully assembled data set. The determinants of pass-through are analyzed by relating the pass-through elasticities to variables representing foreign control, nontariff barriers, product characteristics, and market structure. The author finds that pass-through is incomplete for most products, with significant variation across products. Unlike previous studies, he finds that most of the variation in pass-through is explained by the presence of multinational corporations and nontariff barriers. Copyright 1996 by Royal Economic Society.

Date: 1996
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