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Exchange Rate Pass-through: The Different Responses of Importers and Exporters

Author

Listed:
  • Jacqueline Dwyer

    (Reserve Bank of Australia)

  • Christopher Kent

    (Reserve Bank of Australia)

  • Andrew Pease

    (Reserve Bank of Australia)

Abstract

This paper examines exchange rate pass-through for the prices of both imports and manufactured exports. It is found that, in the long run, exchange rate pass-through over the docks is complete for both classes of good. However, in the short run, responses to currency movements differ significantly. Differences occur with respect to the speed of pass-through and its pattern over time. Pass-through to import prices is found to be more rapid than that to manufactured export prices. However, evidence is presented of a recent and substantial increase in pass-through to manufactured export prices, in keeping with increased international integration. Conversely, existing patterns of exchange rate pass-through to import prices are found to accord with historical experience. The implications of this are discussed with respect to the balance of payments and inflation.

Suggested Citation

  • Jacqueline Dwyer & Christopher Kent & Andrew Pease, 1993. "Exchange Rate Pass-through: The Different Responses of Importers and Exporters," RBA Research Discussion Papers rdp9304, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp9304
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    Cited by:

    1. Gordon Menzies, 1994. "Explaining the Timing of Australia's Manufactured Export Boom," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 27(4), pages 72-86, October.
    2. David Gruen & Jacqueline Dwyer, 1996. "Are Terms of Trade Rises Inflationary?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 29(2), pages 211-224, April.
    3. Tokhir Mirzoev, 2004. "A Dynamic Model of Endogenous Exchange Rate Pass-Through," International Finance 0409002, University Library of Munich, Germany.
    4. Gordon Menzies & Geoffrey Heenan, 1993. "Explaining the Recent Performance of Australia’s Manufactured Exports," RBA Research Discussion Papers rdp9310, Reserve Bank of Australia.
    5. Leon, Jorge & Laverde, Bernal & Duran, Rodolfo, 2002. "Pass Through del Tipo de Cambio en los Precios de Bienes Transables y No Transables en Costa Rica [Exchange Rate Pass Through into the Prices of Tradable and Non Tradable Goods in Costa Rica]," MPRA Paper 44527, University Library of Munich, Germany, revised 2002.
    6. Federico Marongiu, 2004. "Devaluación e Inflacion en Argentina despues de la Convertibilidad," Macroeconomics 0404013, University Library of Munich, Germany.
    7. Jacqueline Dwyer & Philip Lowe, 1993. "Alternative Concepts of the Real Exchange Rate: A Reconciliation," RBA Research Discussion Papers rdp9309, Reserve Bank of Australia.
    8. Christian Gillitzer & Angus Moore, 2016. "Trade Invoicing Currency and First-stage Exchange Rate Pass-through," RBA Research Discussion Papers rdp2016-05, Reserve Bank of Australia.

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