Exchange rate pass-through to import prices: Accounting for changes in the Eurozone trade structure
Valérie Mignon () and
Antonia Lopez Villavicencio
No 2019-16, EconomiX Working Papers from University of Paris Nanterre, EconomiX
This paper assesses whether the emergence of new trading partners (i.e., China and Eastern Europe) as suppliers reduces the exchange rate pass-through (ERPT) in Eurozone countries which differ regarding their external exposure. Using bilateral data on import prices at the two-digit sector level, we find that (i) pass-through is complete in many cases, (ii) ERPT from China is higher than from the United States, and (iii) there is no compelling evidence of a generalized link between ERPT and the increasing integration of some emerging markets in European imports. We also show that the launch of the single currency has not provoked a sufficient change in the part of trade exposed to exchange rate fluctuations and, therefore, has not affected the pass-through. Overall, the trend of liberalization in new players' markets has not altered the competitive environment such as to induce exporters of other countries to absorb exchange rate depreciations.
Keywords: Exchange rate pass-through; import prices; China; Eastern Europe; Eurozone (search for similar items in EconPapers)
JEL-codes: E31 F31 F4 C22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-int and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:drm:wpaper:2019-16
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