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N° 2006-02 |
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| February 2006 |
| Exchange-Rate Pass-Through at the Product Level |
Guillaume Gaulier
Amina Lahrèche-Révil
Isabelle Méjean |
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| This paper uses a detailed database to investigate exchange-rate pass-through at the product
level, for a large number of countries. Since the database provides harmonized trade flows,
pass-through in both export and import prices can be investigated consistently. The empirical
analysis suggests that pricing behaviors are dichotomic: while pass-through is complete in 30
to 40% of sectors, there is significant pricing-to-market in the remaining ones. The average
long-run pass-through coefficient is nevertheless quite high, close to 80% on average. This
result however hides a strong heterogeneity of pass-through behaviors across sectors and exporting
countries, and to a lesser extent across importers. Trying to disentangle composition
effects from structural factors, the analysis suggests that a large part of cross-country differences
is attributable to composition effects. Still, the pass-through is on average higher i) in
volatile environments, ii) in less developed countries, iii) in little integrated markets. |
Abstract |
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| Pass-through; pricing-to-market; product-level analysis; macroeconomic determinants |
Keywords |
| F12, F31, F41 |
JEL classification |
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