Pass-Through of Imported Input Prices to Domestic Producer Prices: Evidence from Sector-Level Data

JaeBin Ahn, Chang-Gui Park and Chanho Park

No 2016/023, IMF Working Papers from International Monetary Fund

Abstract: Motivated by stylized facts pointing to a dominant role of imported inputs in transmitting external price shocks to domestic prices, this paper zooms in to study the pass-through of imported input costs to domestic producer prices. Our approach constructs effective input price indices from sector-level price data combined with sector-level information on input-output linkages. Applying an error correction model specification to sector-level output and input prices, the long-run pass-through rate of effective imported input costs to domestic producer prices is estimated to be around 70 percent in Korea and almost 100 percent in selected European countries.

Keywords: WP; producer price index; exchange rate pass-through; imported input cost pass-through; inflation; cost pass-through; import price index; input price; pass-through coefficient; coefficients from the DFE estimator; pass-through parameter; Producer prices; Import prices; Producer price indexes; Import price indexes (search for similar items in EconPapers)
Pages: 24
Date: 2016-02-12
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Citations: View citations in EconPapers (17)

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Related works:
Journal Article: Pass-through of imported input prices to domestic producer prices: evidence from sector-level data (2017)
Working Paper: Pass-Through of Imported Input Prices to Domestic Producer Prices: Evidence from Sector-Level Data (2016)
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