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Exchange rate pass-through in the global economy: the role of emerging market economies

Matthieu Bussiere () and Tuomas Peltonen ()

No 25/2008, BOFIT Discussion Papers from Bank of Finland, Institute for Economies in Transition

Abstract: This paper estimates export and import price equations for 41 countries -including 28 emerging market economies. Further, it relates the estimated elasticities to structural fac-tors and tests for statistical breaks in the relation between trade prices and exchange rates. Results indicate that (i) the elasticity of trade prices in emerging markets is sizeable, but not significantly higher than in advanced economies; (ii) such elasticity is primarily influ-enced by macroeconomic factors such as the exchange rate regime and the inflationary en-vironment, although microeconomic factors such as product differentiation also play a role; (iii) export and import price elasticities tend to be strongly correlated across countries; (iv) pass-through to import prices has declined in some advanced economies, noticeably the United States; this is consistent with a rise in pricing-to-market in several EMEs and espe-cially with a change in the geographical composition of U.S. imports. Keywords: emerging market economies, exchange rate pass-through, pricing-to-market, local and producer currency pricing, exchange rate regime. JEL classification: F10, F30, F41.

JEL-codes: F10 F30 F41 (search for similar items in EconPapers)
Date: 2008-11-25
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Published in Published with third author Delle Chiaie, S. in IMF Economic Review, Volume 62, Issue 1, April 2014, Pages 146-178

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Related works:
Journal Article: Exchange Rate Pass-Through in the Global Economy: The Role of Emerging Market Economies (2014) Downloads
Working Paper: Exchange rate pass-through in the global economy: the role of emerging market economies (2008) Downloads
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