Outsourcing and pass-through

Rebecca Hellerstein and Sofia Villas-Boas

Journal of International Economics, 2010, vol. 81, issue 2, 170-183

Abstract: A large share of international trade occurs through intra-firm transactions. We show that this common cross-border organization of the firm has implications for the well-documented incomplete transmission of shocks across such borders. We present new evidence of an inverse relationship between a firm's outsourcing of inputs and its rate of exchange-rate pass-through. We then develop a structural econometric model with final assemblers and upstream parts suppliers to quantify how firms' organization of their activities across national borders affects their pass-through behavior.

Keywords: Exchange-rate; pass-through; Intra-firm; trade; Outsourcing; Vertical; contracts (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (40)

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