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Imported-inputs channel of exchange rate pass-through : Evidence from Korean firm-level pricing survey
- Imported-inputs channel of exchange rate pass-through
- Ahn, JaeBin; Park, Chang-Gui
- Bank of Korea
| Title |
Imported-inputs channel of exchange rate pass-through
Similar Titles
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|---|---|
| Sub Title | Evidence from Korean firm-level pricing survey |
| Material Type | Report |
| Author(English) |
Ahn, JaeBin; Park, Chang-Gui |
| Publisher |
[Seoul, South Korea] : Bank of Korea |
| Date | 2014-04 |
| Series Title; No | Bank of Korea working paper / 2014-11 |
| Pages | 29 |
| Subject Country | South Korea(Asia and Pacific) |
| Language | English |
| File Type | Link |
| Subject | Economy < Trade Economy < Economic Administration Economy < Economic System |
| Holding | SSRN |
| License |  |
Abstract
This paper studies the imported inputs channel of exchange rate pass through to the prices of domestically produced goods, exploring the firm-level pricing survey conducted by the Bank of Korea. The survey data reveal that imported inputs play a major role in transmitting exchange rate fluctuations to domestic producer prices, and that the degree of exchange rate pass-through tends to be nonlinear and asymmetric: it is higher when changes in exchange rate are large or when the local currency depreciates. A further investigation of the sources of nonlinearity and asymmetry supports the model's prediction that nonlinear pass-through may arise because large exchange-rate movements trigger additional indirect effects via industry-level price movements, while asymmetric pass-through can be driven by capacity constrained firms.
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