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Two-sided heterogeneity and exchange rate pass-through

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  • Xu, Jianwei
  • Du, Qingyuan
  • Wang, Yaqi

Abstract

The bargaining process between exporters and importers is key to understand the degree of exchange rate pass-through. Following the framework established by Goldberg and Tille (2013), we use a Colombian exporter–importer matched data from 2005 to 2014 to identify the relative bargaining power between exporters and importers, and investigate its effect on exchange rate pass-through. The results show that, within each exporter–importer pair, the role of importers is at least as important as exporters, and higher bargaining power of importers are usually associated with higher exchange rate pass-through. Our findings are robust to a variety of bargaining ability measurement, alternative empirical specifications, and the selection of certain industries.

Suggested Citation

  • Xu, Jianwei & Du, Qingyuan & Wang, Yaqi, 2019. "Two-sided heterogeneity and exchange rate pass-through," Economics Letters, Elsevier, vol. 183(C), pages 1-1.
    • Handle: RePEc:eee:ecolet:v:183:y:2019:i:c:38
    DOI: 10.1016/j.econlet.2019.108534
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    References listed on IDEAS

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    Cited by:

    1. Syarifuddin, Ferry & Izzulhaq, Syahid, 2020. "The Effectiveness of Futures-based Foreign Exchange Intervention: Comparative Studies of Brazil and India," MPRA Paper 104709, University Library of Munich, Germany.
    2. Qingyuan Du & Yalin Liu & Jianwei Xu, 2022. "Importer Dispersion and Exchange Rate Pass-Through," Monash Economics Working Papers 2022-23, Monash University, Department of Economics.
    3. Ferry Syarifuddin, 2020. "Macroeconomic Consequences Of Foreign Exchange Futures," Working Papers WP/14/2020, Bank Indonesia.
    4. Wang, Yaqi & Yu, Miaojie, 2021. "Imports and RMB exchange rate pass-through: The role of quality sorting," Journal of Economic Behavior & Organization, Elsevier, vol. 187(C), pages 470-487.

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    More about this item

    Keywords

    Exchange rate pass-through; Bargaining; Importer heterogeneity; Exporter heterogeneity;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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