Exchange rate pass-through to import prices: Accounting for changes in the Eurozone trade structure

Antonia Lopez Villavicencio () and Valérie Mignon ()
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Antonia Lopez Villavicencio: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique

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Abstract: 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)
Date: 2019
Note: View the original document on HAL open archive server: https://hal.science/hal-04141874
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Related works:
Journal Article: Exchange rate pass-through to import prices: accounting for changes in the eurozone trade structure (2020)
Working Paper: Exchange rate pass-through to import prices: Accounting for changes in the Eurozone trade structure (2020)
Working Paper: Exchange rate pass-through to import prices: Accounting for changes in the Eurozone trade structure (2019)
Working Paper: Exchange rate pass-through to import prices: Accounting for changes in the Eurozone trade structure (2019)
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