Exchange Rate Pass-Through In U.S. Manufacturing Industries

Jiawen Yang ()

The Review of Economics and Statistics, 1997, vol. 79, issue 1, 95-104

Abstract: This paper studies exchange rate pass-through in U.S. manufacturing industries and its cross-sectional variation. Through an adapted Dixit-Stiglitz model of product differentiation, the paper predicts that pass-through is positively related to the degree of product differentiation and inversely related to the elasticity of marginal cost with respect to output. Empirical estimates of the pass-through elasticities show that pass-through is incomplete and varies across industries. The degree of pass-through is found to be positively correlated to different proxies for product differentiation, and negatively to a proxy for the elasticity of marginal cost. © 1997 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Date: 1997
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Working Paper: Exchange Rate Pass-Through in U.S. Manufacturing Industries (1992)
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