Empirical Evidence on the Role of Inflation Regime in the Exchange Rate Pass-Through to Import Prices

2010 ◽  
Author(s):  
Marko Korhonen ◽  
Juha-Pekka Junttila
Keyword(s):  
Exchange Rate ◽  
Empirical Evidence ◽  
Import Prices ◽  
The Exchange Rate ◽  
Pass Through ◽  
Exchange Rate Pass Through

scholarly journals Exchange Rate Pass-Through into Japanese Import Prices: Evidence at Both Bilateral and Product Levels

2021 ◽  
Vol 24 (2) ◽  
pp. 115-132
Author(s):  
Channary Khun ◽  
Sokchea Lim ◽  
Hem Basnet
Keyword(s):  
Exchange Rate ◽  
Unified Framework ◽  
Import Prices ◽  
Product Level ◽  
Product Categories ◽  
Trading Partners ◽  
Lost Decade ◽  
The Exchange Rate ◽  
Pass Through ◽  
Exchange Rate Pass Through

This study investigates the degree of the exchange rate pass-through to Japanese bilateral import prices at the product level for major Japan's trading partners (US, EU, and Asian NIEs) for a period (1998:1-2010:12) dubbed as Japan's lost decade and marked by a gradual the exchange rate appreciation against the US dollar. By considering both country and product dimensions in a unified framework, this study makes one of the first attempts to analyze the responsiveness of Japanese import prices to exchange rate movement. The empirical analysis suggests a declining exchange rate pass-through to Japanese import prices at the bilateral level in some product categories but increasing in others. However, we find no evidence of the changes in exchange rate pass-through for manufacturing, machinery, and overall product level for each of these partners. Our finding sheds light on the recent decline in exchange rate pass-through to Japanese multilateral import prices and helps calibrate its trade relationship with its partner countries.

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