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Heterogeneity in the exchange rate pass-through to consumer prices: the Swiss franc appreciation of 2015

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  • Alex Oktay

    (Swiss National Bank)

Abstract

This paper analyzes the exchange rate pass-through to consumer prices for 85 categories of goods and services in Switzerland. The pass-through estimates are computed using a synthetic difference-in-differences approach that exploits the large Swiss franc appreciation that followed the unexpected removal of the Swiss franc-Euro floor in January 2015. The overall 1-year all-items pass-through is 0.12, which shows that the pass-through is highly incomplete. There is an important heterogeneity across product categories, where pass-through can be as high as 0.80. These variations are linked to the international trade characteristics of the products, as the prices of goods with a high degree of international tradability, with a high import share, or that depend on tourism are shown to be more sensitive to the exchange rate.

Suggested Citation

  • Alex Oktay, 2022. "Heterogeneity in the exchange rate pass-through to consumer prices: the Swiss franc appreciation of 2015," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-20, December.
    • Handle: RePEc:spr:sjecst:v:158:y:2022:i:1:d:10.1186_s41937-022-00102-7
    DOI: 10.1186/s41937-022-00102-7
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    Cited by:

    1. Dr. Romain Baeriswyl & Alex Oktay & Dr. Marc-Antoine Ramelet, 2023. "Exchange rate shocks and equity prices: the role of currency denomination," Working Papers 2023-05, Swiss National Bank.

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    More about this item

    Keywords

    Exchange rate pass-through; Inflation; Currency appreciation; Product heterogeneity;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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