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The pass-through of exchange rate changes to import prices

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  • Ketelsen, Uwe
  • Kortelainen, Mika

Abstract

In this paper, we analyze the empirical relevance of exchange rate pass-through for Finland, Sweden and Denmark during the period 1980-1994.Further, we attemp to determine if there has been a structural change in the pass-through relationship in 1990s.We find that about half the changes in exchange rates and world prices are passed through to import prices within one year, and three-quarters of such changes are passed through to import prices in two years.Moreover, there are no major differences among countries.Parameter constancy tests indicate the possibility of a structural change where the pass-through has slowed in recent years.Possible explanations of this are that the exchange rate regime has changed and competition has increased.

Suggested Citation

  • Ketelsen, Uwe & Kortelainen, Mika, 1996. "The pass-through of exchange rate changes to import prices," Bank of Finland Research Discussion Papers 26/1996, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:rdp1996_026
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    References listed on IDEAS

    as
    1. Froot, Kenneth A & Klemperer, Paul D, 1989. "Exchange Rate Pass-Through When Market Share Matters," American Economic Review, American Economic Association, vol. 79(4), pages 637-654, September.
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    5. Kuismanen, Mika, 1995. "Exchange rates and import prices in Finland: estimation of exchange rate pass-through," Bank of Finland Research Discussion Papers 17/1995, Bank of Finland.
    6. repec:zbw:bofrdp:1995_017 is not listed on IDEAS
    7. Marston, Richard C., 1990. "Pricing to market in Japanese manufacturing," Journal of International Economics, Elsevier, vol. 29(3-4), pages 217-236, November.
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