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Exchange Rate Pass-Through into Japanese Import Prices: Evidence at Both Bilateral and Product Levels

Channary Khun, Sokchea Lim () and Hem Basnet ()
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Channary Khun: International Fund for Agricultural Development, Rome, Italy
Hem Basnet: Methodist University, North Carolina, U.S.

American Business Review, 2021, vol. 24, issue 2, 115-132

Abstract: This study investigates the degree of the exchange rate pass-through to Japanese bilateral import prices at the product level for major Japan's trading partners (US, EU, and Asian NIEs) for a period (1998:1-2010:12) dubbed as Japan's lost decade and marked by a gradual the exchange rate appreciation against the US dollar. By considering both country and product dimensions in a unified framework, this study makes one of the first attempts to analyze the responsiveness of Japanese import prices to exchange rate movement. The empirical analysis suggests a declining exchange rate pass-through to Japanese import prices at the bilateral level in some product categories but increasing in others. However, we find no evidence of the changes in exchange rate pass-through for manufacturing, machinery, and overall product level for each of these partners. Our finding sheds light on the recent decline in exchange rate pass-through to Japanese multilateral import prices and helps calibrate its trade relationship with its partner countries.

Keywords: Exchange Rate Pass-Through; Japanese Bilateral Import Prices (search for similar items in EconPapers)
JEL-codes: F30 F31 F41 (search for similar items in EconPapers)
Date: 2021
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