Import Price Formation and Pricing to Market: A Test on Norwegian Data
Bjørn E. Naug and
Ragnar Nymoen ()
Discussion Papers from Statistics Norway, Research Department
This paper investigates the determinants of Norwegian import prices of manufactures over the period 1970(1) - 1991(4). Multivariate cointegration analysis establishes a long-run relationship between import prices, foreign prices, the exchange rate and domestic unit labour costs. Normalized on import prices, the long-run elasticities are 0.63 (foreign prices and the exchange rate) and 0.37 (domestic costs). Deviations from this relationship are highly significant in a structural import price equation, which also contains positive effects of growth in domestic demand and inflation, as well as a negative effect from the Norwegian unemployment rate. The estimated parameters appear reasonably stable within the sample.
Keywords: Import price formation; pricing to market; domestic effects; Johansen procedure; structural error correction model; super exogeneity. (search for similar items in EconPapers)
JEL-codes: C32 C51 C52 C22 D40 F41 L16 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:157
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