Outsourcing and Pass-Through

Rebecca Hellerstein and Sofia Villas-Boas

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: A large share of international trade occurs through intra-firm transactions. We show that this common cross-border organization of the firm has implications for the well-documented incomplete transmission of shocks across such borders. We present new evidence of an inverse relationship between a firm’s outsourcing of inputs and its rate of exchange-rate pass-through. We then develop a structural econometric model with final assemblers and upstream parts suppliers to quantify how firms’ organization of their activities across national borders affects their pass-through behavior.

Keywords: exchange-rate pass-through; intra-firm trade; vertical contracts; outsourcing; Social and Behavioral Sciences; Business (search for similar items in EconPapers)
Date: 2010-02-01
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Citations: View citations in EconPapers (37)

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Journal Article: Outsourcing and pass-through (2010)
Working Paper: Outsourcing and pass-through (2010)
Working Paper: Outsourcing and Pass-Through (2010)
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