Lecture 5 - Isabelle MEJEAN's home page

Betts & Devereux (1996)
Campa & Goldberg (2006)
ERPT into import and consumer price indices (3)
Difference between the import price and the CPI responsiveness to
exchange rate movements for almost all OECD countries ⇒ Pass
through into border prices far exceeds pass through into the CPI.
The (unweighted) average pass through elasticity is 0.64 for import
prices. It is significantly different from zero in seventeen of the
twenty-three countries. VERIFIER LA DEFINITION DES PRIX
The average pass-through into consumer prices is 0.17 over the long
run. These averages mask huge cross-country differences in CPI
sensitivity. Nevertheless, the hypothesis that the pass through to
CPIs is smaller than one can be rejected for all but one country. In
general, larger countries tend to have lower levels of estimated pass
through into the CPI.
Isabelle Méjean Lecture 5