Exchange-rate pass-through in Japanese export pricing |
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Authors: | Ayumi Kikuchi Michael Sumner |
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Affiliation: | 1. Department of Economics , The George Washington University , Washington, DC 20052, USA mortile@gwu.edu;3. Department of Economics , The George Washington University , Washington, DC 20052, USA |
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Abstract: | Two recent aggregative studies claim to demonstrate that Japanese exporters absorb a proportion of exchange-rate changes in their profit margins; but the estimates of this proportion are dramatically different. This study accounts for the discrepancy, and shows that neither estimate is credible. These results identify incomplete pass-through, conditional on costs, as a transitory consequence of export pricing in currencies other than yen. The only long-run effect of the exchange rate on yen-dominated export prices operates through imported materials prices. |
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