On the Seemingly Incompleteness of Exchange Rate Pass-Through to Import Prices: Do Globalization and/or Regional Trade Matter?

Antonia López-Villavicencio () and Valérie Mignon ()
Additional contact information
Antonia López-Villavicencio: University of Paris Nanterre
Authors registered in the RePEc Author Service: Antonia López Villavicencio

A chapter in Recent Econometric Techniques for Macroeconomic and Financial Data, 2021, pp 35-59 from Springer

Abstract: Abstract This paper assesses the impact of globalization and regionalization on exchange rate pass-through (ERPT) into import prices in three core eurozone countries. To this end, we consider various indicators of globalization and rely on both aggregated (i.e., country level) and disaggregated (i.e., good level) data. Using quarterly data since 1992, we do not find compelling evidence that global factors cause a structural change in the degree of exchange rate pass-through. Indeed, increased trade openness or lower trade tariffs push up ERPT in some sectors, though results are quite sparse. However, regionalization, defined as a higher proportion of intra-EU imports’ share in total imports, reduces the pass-through in a more generalized way. Most importantly, we show that ERPT incompleteness generally observed in the literature is in appearance only and not at play when intra-EU trade is controlled for. Overall, our findings show that ERPT is complete and significant in numerous sectors, meaning that exchange rate changes still exert important pressure on domestic prices.

Keywords: Exchange rate pass-through; Import prices; Globalization; Eurozone (search for similar items in EconPapers)
JEL-codes: C22 E31 F31 F4 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: On the Seemingly Incompleteness of Exchange Rate Pass-Through to Import Prices: Do Globalization and/or Regional Trade Matter? (2020)
Working Paper: On the seemingly incompleteness of exchange rate pass-through to import prices: Do globalization and/or regional trade matter? (2017)
Working Paper: On the seemingly incompleteness of exchange rate pass-through to import prices: Do globalization and/or regional trade matter? (2017)
Working Paper: On the seemingly incompleteness of exchange rate pass-through to import prices: Do globalization and/or regional trade matter? (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:dymchp:978-3-030-54252-8_2

Ordering information: This item can be ordered from
http://www.springer.com/9783030542528

DOI: 10.1007/978-3-030-54252-8_2

Access Statistics for this chapter

More chapters in Dynamic Modeling and Econometrics in Economics and Finance from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().