Global influences on UK manufacturing prices: 1970-2000 |
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Authors: | Ken Coutts Neville R Norman |
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Institution: | a Faculty of Economics, University of Cambridge, Sidgwick Avenue, Cambridge CB3 9DD, UK b Department of Economics, University of Melbourne, Victoria, 3010, Australia |
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Abstract: | We introduce the first consistent series of domestic-product and related import price indices at the industry level for the UK, using the data to analyse both domestic and international determinants of UK manufactured product prices. Foreign influences on UK prices in domestic markets are always present, but domestic cost movements dominate. We show that the pass-through of world-price, tariff and exchange rate changes into product prices is partial in general and varies markedly between product categories. Standard tariff and exchange rate theories overstate price responses to global pricing determinants and fail to allow for variation between industrial sectors. Such theories can mislead when used for policy analysis and prediction. |
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Keywords: | C22 C32 C81 D43 F12 F14 L13 L60 |
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