Exchange Rate Pass-Through to Import Prices in the Euro Area

39 Pages Posted: 4 Oct 2005

See all articles by Linda S. Goldberg

Linda S. Goldberg

Federal Reserve Bank of New York; National Bureau of Economic Research (NBER)

José Manuel Campa

University of Navarra - Madrid Campus - IESE Business School; National Bureau of Economic Research (NBER)

José Manuel Gonzalez Minguez

Banco de España

Multiple version iconThere are 4 versions of this paper

Date Written: September 2005

Abstract

This paper presents an empirical analysis of transmission rates from exchange rate movements to import prices, across countries and product categories, in the euro area over the last fifteen years. Our results show that the transmission of exchange rate changes to import prices in the short run is high, although incomplete, and that it differs across industries and countries; in the long run, exchange rate pass-through is higher and close to 1. We do not find compelling evidence that the introduction of the euro caused a structural change in exchange rate pass-through. Although some estimated point elasticities have declined, structural breaks in exchange rate pass-through into import prices are evident only in a limited sample of manufacturing industries. And since the euro was introduced, industries producing differentiated goods have been more likely to experience reduced rates of exchange rate pass-through to import prices. Exchange rate changes continue to lead to large changes in import prices across euro-area countries.

Keywords: currency, invoicing, pass-through, exchange rate, producer currency pricing, local currency pricing

JEL Classification: F3, F4

Suggested Citation

Goldberg, Linda S. and Campa, José Manuel and Gonzalez Minguez, José Manuel, Exchange Rate Pass-Through to Import Prices in the Euro Area (September 2005). FRB of New York Staff Report No. 219. Available at SSRN: https://ssrn.com/abstract=813905 or http://dx.doi.org/10.2139/ssrn.813905

Linda S. Goldberg (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-2836 (Phone)
212-720-6831 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

José Manuel Campa

University of Navarra - Madrid Campus - IESE Business School ( email )

Camino del Cerro del Aguila 3
Madrid, 28023
Spain
+34 91 357 0809 (Phone)
+34 91 357 2913 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

José Manuel Gonzalez Minguez

Banco de España ( email )

Alcala 50
28014 Madrid
Spain
+34 91 338 5518 (Phone)
+34 91 338 6190 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
120
Abstract Views
1,400
rank
119,212
PlumX Metrics