Exchange Rate Pass-through in China: A Cost-Push Input-Output Price Model

Yuwan Duan, Yanping Zhao () and Jakob Haan
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Yuwan Duan: Central University of Finance and Economics
Yanping Zhao: Ocean University of China
Jakob Haan: De Nederlandsche Bank

Open Economies Review, 2020, vol. 31, issue 3, No 1, 513-528

Abstract: Abstract Relying on a cost-push input-output model for China, we estimate the exchange rate pass-through to both domestic prices and export prices at the industry level. Our empirical results indicate that the decline of the RMB price in the processing exports sector in response to an RMB appreciation is larger than that in the non-processing exports sector, which, in turn, is larger than the decline of the consumer price indexes. Our cross-sector analysis also suggests that exchange rate changes have the lowest impact on prices in capital- and technology-insensitive industries.

Keywords: RMB appreciation; Input-output model; Export prices; Domestic prices; F31; F41 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s11079-020-09590-7

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