Exchange Rate Pass-Through and Dynamic Oligopoly: An Empirical Investigation
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Summary:
This paper explicitly takes into account the dynamic oligopolistic rivalry among source producers to evaluate the degree of exchange rate pass-through. Using recent time-series techniques for the case of imported automobiles in Switzerland, the results show that prices are strategic complements and that the degree of pass-through is lower in the long run than in the short run. We attribute this to the fact that, although some rivals match long-term price changes, others do not, inducing the producer who faces a change in exchange rate to absorb a greater proportion of the variation.
Series:
Working Paper No. 1999/047
Subject:
Asset prices Currencies Exchange rate adjustments Exchange rate pass-through Exchange rates Foreign exchange Money Prices
English
Publication Date:
April 1, 1999
ISBN/ISSN:
9781451846621/1018-5941
Stock No:
WPIEA0471999
Pages:
33
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