Chapter

Pass-Through of Exchange Rates to Consumption Prices

Edited by José Manuel Campa and Linda S. Goldberg

in International Financial Issues in the Pacific Rim

Published by University of Chicago Press

Published in print August 2008 | ISBN: 9780226386829
Published online February 2013 | e-ISBN: 9780226387086 | DOI: http://dx.doi.org/10.7208/chicago/9780226387086.003.0006
Pass-Through of Exchange Rates to Consumption Prices

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This chapter considers the evolution over the past decade in the predicted sensitivity of consumption prices of imported and domestically-produced goods with respect to exchange rates. It focuses on changes in distribution margins and imported inputs use, as well as on pass-through into import prices at the border for five broad categories of goods: manufactured, nonmanufactured, food, energy, and raw materials. One of the major findings of the study is that the degree of pass-through into import prices is more closely defined by industry than by country; the only exception is the United States. Pass-through into import prices is noisiest and least precisely measured with respect to energy imports. This may be due to regulatory changes in the energy sector in many countries. Pass-through effects are also very precisely estimated among manufactured goods and food in many countries. It is argued that growth in imported input use, especially in distribution services, has increased the predicted sensitivity of retail prices of imported goods to exchange rates.

Keywords: consumption prices; imported goods; exchange rates; food; energy; raw materials; manufactured goods; import prices; pass-through

Chapter.  14711 words. 

Subjects: Business and Management

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