Exchange Rate Pass-through: Evidence from Aggregate Japanese Exports

• Published in: Southern economic journal Vol. 60; no. 2; pp. 454 - 462
• Main Author: Parsley, David C.
• Format: Journal Article
• Language: English
• Published: Chapel Hill, N.C., etc Southern Economic Association and the University of North Carolina at Chapel Hill 01-10-1993; Southern Economic Association; Southern Economic Association and the University of North Carolina
• Subjects: Chemical composition; Commodities; Currency; Economic aspects; Economic statistics; Economic theory; Exchange; Exchange rates; Exporters; Exports; Foreign exchange; Foreign exchange rates; Import prices; International trade; Japan; Metal aggregates; Parsley; Price levels; Prices; Prices and rates; Statistical analysis; Trade; Japan
• ISSN: 0038-4038; 2325-8012
• DOI: 10.2307/1060091

An analysis of Japanese exports during the 1980s is presented that documents the stability of aggregate exchange rate pass-through. It is not possible to test whether the pass-through to the US market was stable over the period, but clearly stability to the US market is consistent with the given results. Japanese pass-through is also examined at a more disaggregated sectoral level and it is found that although pass-through elasticities vary widely among major commodity sectors, the null hypothesis of stability cannot be rejected for 5 of the 6 sectors studied. While sectoral differences in pass-through are consistent with even simple theories of pass-through, these differences have special importance for the question of the stability of aggregate pass-through. In particular, aggregate pass-through can vary due simply to aggregation effects, even when pass-through in each sector is constant.