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Tariff and exchange rate pass-through for Chinese exports: A firm-level analysis across customs regimes

Florence Bouvet, Alyson C. Ma and Ari Van Assche

China Economic Review, 2017, vol. 46, issue C, 87-96

Abstract: We examine whether a firm's import content share differentially affects the degree of tariff and exchange rate pass-through into its export prices. Our pricing-to-market model suggests that a firm's import content share negatively affects the degree of exchange rate pass-through but does not affect the degree of tariff pass-through. Using firm-level data for Chinese exporting firms during the period 2000–2006, we find evidence of an almost complete exchange rate pass-through. As expected, when we distinguish firms by their trade regime, processing-trade firms, especially pure-assembly firms which tend to have higher import-content share, have a lower exchange rate pass-through than ordinary trade firms. We find no evidence that the tariff pass-through differs across the various trade regimes.

Keywords: Exchange-rate pass-through; Tariff pass-through; China; Firm type; Custom regime (search for similar items in EconPapers)
JEL-codes: F31 F41 F14 (search for similar items in EconPapers)
Date: 2017
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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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