Abstract

RINCON, HERNÁN; CAICEDO, ÉDGAR  and  RODRIGUEZ, NORBERTO. EXCHANGE RATE PASS-THROUGH EFFECTS: A DISAGGREGATE ANALYSIS OF COLOMBIAN IMPORTS OF MANUFACTURED GOODS. Ens. polit. econ. [online]. 2007, vol.25, n.54, pp.90-121. ISSN 0120-4483.

This paper quantifies the exchange rate passthrough effects on import prices within a sample of Colombian manufactured imports. Also, whether the foreign exchange and inflation regimes affect the degree of pass-through is evaluated. The analytical framework used was a mark-up model. The main finding is that the long-run pass-through elasticities are stable and go from 0.1 to 0.8 and the short-run ones are unstable and go from 0.1 to 0.7, supporting mark-up hypotheses, in contrast to the hypotheses of perfect market competition and complete pass-through. The findings also show evidence of the variability and different degrees of pass-trough among manufacturing sectors, which confirm the importance of using dynamic models and disaggregate data for an analysis of the pass-through. Both, the hypothesis that under a floating regime there is a low degree of pass-through and the hypothesis that a low inflation environment has the same result are not supported.

Keywords : Pass-through effects; PPP; imperfect competition; floating regime; low inflation environment; fixed parameter model; time-varying parameter model; Kalman filtering.

        · abstract in Spanish     · text in English     · English ( pdf )