On the seemingly incompleteness of exchange rate pass-through to import prices: Do globalization and/or regional trade matter?

Antonia Lopez-Villavicencio and Valérie Mignon ()
Authors registered in the RePEc Author Service: Antonia López Villavicencio

No 2017-32, EconomiX Working Papers from University of Paris Nanterre, EconomiX

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)
Pages: 31 pages
Date: 2017
New Economics Papers: this item is included in nep-eec, nep-int, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Chapter: On the Seemingly Incompleteness of Exchange Rate Pass-Through to Import Prices: Do Globalization and/or Regional Trade Matter? (2021)
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)
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Persistent link: https://EconPapers.repec.org/RePEc:drm:wpaper:2017-32

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