Exchange Rate Pass Through When Market Share Matters
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Author | : Kenneth Froot |
Publisher | : |
Total Pages | : 32 |
Release | : 1988 |
Genre | : Economics |
ISBN | : |
Download Exchange Rate Pass-through when Market Share Matters Book in PDF, Epub and Kindle
We investigate pricing to market when the exchange rate changes in cases where firms' future demands depend on their current market shares. We show that i) profit maximizing foreign firms may either raise or lower their domestic currency export prices when the domestic exchange rate appreciates temporarily (i.e. the "pass-through" from exchange rate changes to import prices may be perverse); ii) current import prices may be more sensitive to the expected future exchange rate than to the current exchange rate; iii) current import prices fall in response to an increase in uncertainty about the future exchange rate. We present evidence that suggests the behavior of expected future exchange rates may provide a clue to the puzzling behavior of U.S. import prices during the 1980s
Author | : Kenneth A. Froot |
Publisher | : |
Total Pages | : 32 |
Release | : 1988 |
Genre | : |
ISBN | : |
Download Exchange rate pass-through when market share matters Book in PDF, Epub and Kindle
Author | : International Monetary Fund |
Publisher | : International Monetary Fund |
Total Pages | : 34 |
Release | : 2021-05-06 |
Genre | : Business & Economics |
ISBN | : 1513573691 |
Download An Empirical Assessment of the Exchange Rate Pass-through in Mozambique Book in PDF, Epub and Kindle
Determining the magnitude and speed of the exchange rate passthrough (ERPT) to inflation has been of paramount importance for policy-makers in developed and emerging economies. This paper estimates the exchange rate passthrough in Mozambique using econometric techniques on a sample spanning from 2001 to 2019. Results suggest that the ERPT is assymetric, sizable and fast, with 50 percent of the exchange rate variations passing through to prices in less than six months. Policy-makers should continue to pursue low and stable inflation and develop a strong track record of prudent macroeconomic policies for the ERPT to decline.
Author | : |
Publisher | : |
Total Pages | : |
Release | : 1988 |
Genre | : |
ISBN | : |
Download Exchange Rate Pass-through when Market Share Matters Book in PDF, Epub and Kindle
Author | : International Monetary Fund |
Publisher | : International Monetary Fund |
Total Pages | : 24 |
Release | : 1989-09-05 |
Genre | : Business & Economics |
ISBN | : 1451961391 |
Download Exchange Rate Fluctuations, Pass-Through, and Market Share Book in PDF, Epub and Kindle
When the exchange rate fluctuates and the market exhibits hysteresis, planning horizons of domestic and foreign competitors will matter in determining pass-through as well as relative market shares of these firms. Using the Cournot duopoly model, it is shown that if the foreign exporter is a long-term maximizer relative to the domestic firm, pass-through will be lower and average export penetration higher than otherwise.
Author | : Natalie Chen |
Publisher | : International Monetary Fund |
Total Pages | : 58 |
Release | : 2014-03-12 |
Genre | : Business & Economics |
ISBN | : 1475526431 |
Download Quality, Trade, and Exchange Rate Pass-Through Book in PDF, Epub and Kindle
This paper investigates theoretically and empirically the heterogeneous response of exporters to real exchange rate fluctuations due to product quality. Our model shows that the elasticity of demand perceived by exporters decreases with a real depreciation and with quality, leading to more pricing-to-market and to a smaller response of export volumes to a real depreciation for higher quality goods. We test the proposed theory using a highly disaggregated Argentinean firm-level wine export dataset between 2002 and 2009 combined with experts wine rankings as a measure of quality. The model predictions find strong support in the data and the results are robust to different measures of quality, samples, specifications, and to the potential endogeneity of quality.
Author | : Gordon M. Bodnar |
Publisher | : |
Total Pages | : 48 |
Release | : 1999 |
Genre | : |
ISBN | : |
Download Pass-through Exposure Book in PDF, Epub and Kindle
Author | : Ronald MacDonald |
Publisher | : Routledge |
Total Pages | : 334 |
Release | : 2005 |
Genre | : Foreign exchange |
ISBN | : 1134838220 |
Download Exchange Rate Economics Book in PDF, Epub and Kindle
''In summary, the book is valuable as a textbook both at the advanced undergraduate level and at the graduate level. It is also very useful for the economist who wants to be brought up-to-date on theoretical and empirical research on exchange rate behaviour.'' ""Journal of International Economics""
Author | : Jean-Paul Fitoussi |
Publisher | : Wiley-Blackwell |
Total Pages | : 168 |
Release | : 1988 |
Genre | : Europe |
ISBN | : |
Download The Slump in Europe Book in PDF, Epub and Kindle
Author | : Raphael Auer |
Publisher | : |
Total Pages | : 0 |
Release | : 2015 |
Genre | : Exchange rate pass-through |
ISBN | : |
Download Market Structure and Exchange Rate Pass-through Book in PDF, Epub and Kindle
We study firm-level pricing behavior through the lens of exchange rate pass-through and provide new evidence on how firm-level market shares and price complementarities affect pass-through decisions. Using micro-data from U.S. import prices, we identify two facts: First, exactly the firms that react the most with their prices to changes in their own costs are also the ones that react the least to changing competitor prices. Second, the response of import Prices to exchange rate changes is U-shaped in market share while it is hump-shaped in response to competitor prices. We show that both facts are consistent with a model based on Dornbusch (1987) that generates variable markups through a nested-CES demand system. Finally, based on the model, we find that direct cost pass-through and price complementarities play approximately equally important roles in determining pass-through but also partly offset each other. This suggests that equilibrium feedback effects in pricing are large. Omission of either channel in an empirical analysis results in a failure to explain how market structure affects price-setting in industry equilibrium.