Effects of a Free Trade Agreement on the Exchange Rate Pass-Through to Import Prices

Arnoldo Lopez Marmolejo

No 1102, Working Papers from BBVA Bank, Economic Research Department

Abstract: This paper investigates the effect of trade liberalization on the exchange rate pass-through (ERPT) to import prices. To do so, it employs an empirical estimation of the effects of NAFTA on the Mexican ERPT, and uses a Ricardian general equilibrium model. The model identifies the direct relationship between the tariffs and the pass-through by good. The second channel is the effect that tariffs have on the composition of imports, altering indirectly the aggregate pass-through.

Keywords: Ricardian model; exchange rate pass-through; NAFTA (search for similar items in EconPapers)
JEL-codes: F31 F41 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2011-01
New Economics Papers: this item is included in nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Effects of a Free Trade Agreement on the Exchange Rate Pass‐through to Import Prices (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:bbv:wpaper:1102

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