In this chapter, the authors use an EGARCH-ECM to estimate the pass-through effects of Foreign Exchange (FX) rate changes and changes in producers’ prices for 20 U.K. export sectors. The long-run adjustments of export prices to FX rate changes and changes in producers’ prices are within the range of –1.02% (for the Textiles sector) and –17.22% (for the Meat sector). The contemporaneous PricingT...

This paper represents one of the first analyses of exchange rate pass-through in a dynamic context. It explores the impact of exchange rate fluctuations in a duopoly where firms interact over an indefinite period of time. In these circumstances there exists an incentive for the duopolists to tacitly collude. The paper investigates the manner in which exchange rate changes influence the inherent...

This paper focuses on the pass-through of exchange rate fluctuations into prices of final goods and services, and examines whether contrasting pass-through rates are associated with regionaland/or product-specific characteristics. Using CPI microdata, we estimate industry-specific rates of pass-through across regions in Mexico. By looking at within country price responses, this study alleviates...

The recent sharp appreciation of the Canadian dollar vs. the US dollar poses difficulties for the Canadian economy and reignites the debate as to whether Canada should fix the Canadian dollar to the US dollar by implementing a unilateral peg or forming a monetary union. We compare the welfare of different combinations of monetary and currency policies in an open-economy macroeconomic model that...

This paper investigates the implications of endogenous trade participation for international business cycles, trade flow dynamics and exchange rate pass-through when price adjustments are staggered across firms. I develop a two-country dynamic stochastic general equilibrium model wherein firms make state-dependent decisions on entry and exit in the export market and the frequency of price adjus...