An Empirical Assessment of the Exchange Rate Pass-Through in Mozambique

Simione, Felix; Manguinhane, Edson

doi:10.2139/ssrn.4026308

Cited by 2 publications

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“…Specifically, the study revealed that increases in the prices of competitor goods tend to drive up the prices of Albanian exports, suggesting a responsive adjustment strategy that aligns with PTM theory. Conversely, appreciation of the Albanian Lek against the Euro generally leads to a decrease in export prices, which helps mitigate the potential loss of competitiveness due to currency strength [5,6].…”

Section: Discussionmentioning

confidence: 99%

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Pricing to Market Behavior: Evidence from Albanian Exporting Firms

Sulaj,

Çiço,

Trebicka

2024

IJSDP

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This paper delves into the pricing behavior of Albanian exporting firms, analyzing their response to market conditions and exchange rate fluctuations. Drawing inspiration from Krugman's seminal work in 1986, on pricing to market dynamics, the study investigates whether Albanian firms employ similar adaptive pricing strategies observed in larger economies. Recent empirical research suggests that such practices are prevalent in small, open economies like Albania, contrary to earlier assumptions. Utilizing a linear econometric model and quarterly data spanning from 2005 to 2023, the analysis aims to ascertain the extent to which Albanian exporting firms act as price setters in response to market dynamics. Through rigorous empirical analysis, including descriptive statistics, unit root tests, ARDL cointegration analysis, model estimation, hypothesis testing, and robustness checks, the study provides insights into the relationship between pricing behavior and exchange rate movements. The findings highlight the significance of adaptive pricing strategies in global markets and offer implications for policymakers, businesses, and academic researchers. Policymakers can use these insights to formulate effective economic policies, while businesses can make informed decisions regarding pricing strategies and currency risk management in the global marketplace. Moreover, this study contributes to the econometrics and macroeconomics literature, paving the way for future research into pricing behavior and exchange rate dynamics. Overall, it serves as a foundational resource for informed decision-making and further academic inquiry into pricing behavior and exchange rate dynamics in emerging economies like Albania.

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Section: Discussionmentioning

confidence: 99%

“…According to these theories, firms vary their pricing based on several factors, including market-specific conditions and currency exchange rates [5,6]. The optimal pricing strategy for exporters involves adjusting prices not only to maximize profits but also to adapt to fluctuations in demand elasticity and exchange rate movements [7].…”

Section: Introductionmentioning

confidence: 99%

Pricing to Market Behavior: Evidence from Albanian Exporting Firms

Sulaj,

Çiço,

Trebicka

2024

IJSDP

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“…Using Autoregressive Distributive Lag (ARDL), Aisen et al. (2021) estimated the ERPT in Mozambique for a sample covering 2001 to 2019.…”

Section: Review Of Related Literaturementioning

confidence: 99%

Exchange rate pass-through to inflation in South Africa: is there non-linearity?

Gereziher

Nuru

2023

AJEMS

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PurposeThis paper aims to examine the asymmetric effects of exchange rate shocks on inflation for a small open economy, namely South Africa, over the period 1970Q1–2020Q1.Design/methodology/approachA threshold vector autoregressive model that allows parameters to switch according to whether a threshold variable crosses an estimated threshold is employed to address the objective of this paper. The threshold value is determined endogenously using the Hansen (1996) test. Generalized impulse responses introduced by Koop et al. (1996) are used to study the effects of exchange rate shocks on inflation depending on their size, sign and timing to the inflation cycle. The authors also employed a Cholesky decomposition identification scheme to identify exchange rate shocks in the non-linear model.FindingsThe results show that there is a non-linearity effect of the exchange rate shock on inflation. In particular, the effects of 1 or 2 standard deviations of positive (appreciation) or negative (depreciation) exchange rate shock on inflation are small in the long run but a bit larger in the high inflation regime than the low inflation regime.Originality/valueThis paper contributes to the literature on the non-linear effects of exchange rate pass-through (ERPT) to inflation for Sub-Saharan African economies in general and the South African economy in particular by incorporating the size and timing of the exchange rate shocks to the inflation cycle.

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An Empirical Assessment of the Exchange Rate Pass-Through in Mozambique

Cited by 2 publications

References 0 publications

Pricing to Market Behavior: Evidence from Albanian Exporting Firms

Pricing to Market Behavior: Evidence from Albanian Exporting Firms

Exchange rate pass-through to inflation in South Africa: is there non-linearity?

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