NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Exchange Rate Pass-Through into Import Prices: A Macro or Micro Phenomenon?

Jose Manuel Campa, Linda S. Goldberg

NBER Working Paper No. 8934
Issued in May 2002
NBER Program(s):   IFM   ITI

Exchange rate regime optimality, as well as monetary policy effectiveness, depends on the tightness of the link between exchange rate movements and import prices. Recent debates hinge on whether producer-currency-pricing (PCP) or local currency pricing (LCP) of imports is more prevalent, and on whether exchange rate pass-through rates are endogenous to a country's macroeconomic conditions. We provide cross-country and time series evidence on both of these issues for the imports of twenty-five OECD countries. Across the OECD and especially within manufacturing industries, there is compelling evidence of partial pass-through in the short-run- rejecting both PCP and LCP. Over the long run, PCP is more prevalent for many types of imported goods. Higher inflation and exchange rate volatility are weakly associated with higher pass-through of exchange rates into import prices. However, for OECD countries, the most important determinants of changes in pass-through over time are microeconomic and relate to the industry composition of a country's import bundle.

download in pdf format
   (206 K)

email paper

This paper is available as PDF (206 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w8934

Published: Campa, Jose and Linda S. Goldberg. “Exchange Rate Pass Through into Import Prices." Review of Economics and Statistics 87, 4 (November 2005): 679-690.

Users who downloaded this paper also downloaded these:
Obstfeld and Rogoff w4693 Exchange Rate Dynamics Redux
Campa and Goldberg Pass-Through of Exchange Rates to Consumption Prices: What Has Changed and Why?
Froot and Klemperer w2542 Exchange Rate Pass-Through When Market Share Matters
Mishkin w13889 Exchange Rate Pass-Through And Monetary Policy
Frankel, parsley, and Wei w11199 Slow Passthrough Around the World: A New Import for Developing Countries?
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us