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Exchange-rate pass-through to import prices in the euro area

Author

Listed:
  • Campa, Jose M.

    (IESE Business School)

  • Goldberg, Linda S.

    (Federal Reserve Bank of New York)

  • Gonzalez-Minguez, Jose M.

    (Banco de España)

Abstract
This paper presents an empirical analysis of transmission rates from exchange rate movements to import prices, across countries and product categories, in the euro area over the last fifteen years. Our results show that the transmission of exchange rate changes to import prices in the short run is high, although incomplete, and that it differs across industries and countries; in the long run, exchange rate pass-through is higher and close to one. We find no strong statistical evidence that the introduction of the euro caused a structural change in this transmission. Although estimated point elasticities seem to have declined since the introduction of the euro, we find little evidence of a structural break in the transmission of exchange rate movements except in the case of some manufacturing industries. And since the euro was introduced, industries producing differentiated goods have been more likely to experience reduced rates of exchange rate pass-through to import prices. Exchange rate changes continue to lead to large changes in import prices across euro-area countries.

Suggested Citation

  • Campa, Jose M. & Goldberg, Linda S. & Gonzalez-Minguez, Jose M., 2005. "Exchange-rate pass-through to import prices in the euro area," IESE Research Papers D/609, IESE Business School.
    • Handle: RePEc:ebg:iesewp:d-0609
    as

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    File URL: http://www.iese.edu/research/pdfs/DI-0609-E.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Currency; invoicing; pass-through; exchange rate; producer currency pricing; local currency pricing;
    All these keywords.

    JEL classification:

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

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