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Estimates of Exchange Rate Pass-through with Product-level Data

Author

Listed:
  • Yusuf Emre Akgunduz
  • Emine Meltem Bastan
  • Ufuk Demiroglu
  • Semih Tumen

Abstract

We estimate the export and import pass-through rates using product-level data from Turkey. We find that the Turkish lira (TRY) exchange rate changes are mostly passed on to TRY prices of exports and imports�and therefore modestly to their prices in trading partners� currencies. The rate of average pass-through to TRY-prices is 89% for imported goods and 82% for exported goods, with no apparent lags in the impact. Pass-through estimates by sector show variation and are relatively low for food and agricultural products. We argue that the highly-detailed productlevel data enable us to estimate the pass-through rates with better reliability and precision than we could by using only aggregated time-series data. We also introduce a pooled equation to estimate the difference between the export and import pass-through rates�a potentially useful statistic�in a way that allows statistical inference.

Suggested Citation

  • Yusuf Emre Akgunduz & Emine Meltem Bastan & Ufuk Demiroglu & Semih Tumen, 2019. "Estimates of Exchange Rate Pass-through with Product-level Data," Working Papers 1922, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:1922
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2019/19-22
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    Cited by:

    1. M. Faruk Aydin & Selcuk Gul, 2020. "The Role of Real Exchange Rates in Export Price Determination," CBT Research Notes in Economics 2006, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.

    More about this item

    Keywords

    Exchange rate pass-through; Product-level estimates; Turkish export prices; Turkish import prices;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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