The Review of Economics and Statistics Vol. 79 No. 1 1997
Exchange Rate Pass-Through in U.S. Manufacturing Industries
Abstract
This paper studies exchange rate pass-through in U.S. manufacturing industries and its cross-sectional variation. Through an adapted Dixit–Stiglitz model of product differentiation, the paper predicts that pass-through is positively related to the degree of product differentiation and inversely related to the elasticity of marginal cost with respect to output. Empirical estimates of the pass-through elasticities show that pass-through is incomplete and varies across industries. The degree of pass-through is found to be positively correlated to different proxies for product differentiation, and negatively to a proxy for the elasticity of marginal cost.
- DOI
- 10.1162/003465397556430
- Volume
- 79
- Issue
- 1
- Pages
- 95-104
- Language
- en
- Sources
- openalex crossref