Has pass-through to export prices risen? Evidence for Japan

Ceglowski, Janet

doi:10.1016/j.jjie.2009.10.001

Cited by 12 publications

(9 citation statements)

References 19 publications

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“…Existing studies have typically found strong evidence of pricing-to-market (PTM) or weak evidence of exchange rate pass-through (ERPT) in Japanese exports, implying that Japanese exporters tend to stabilize their export prices in response to exchange rate changes. 2 For instance, using rolling regression, Ceglowski (2010) demonstrated that Japanese exporters increased the degree of PTM from the late 1990s to 2007, which is consistent with Taylor (2000) that argued a decline in ERPT. However, Japanese firms are likely to have changed their export pricing behavior from 2007 in response to the rapid and large appreciation and depreciation periods.…”

Section: Introductionsupporting

confidence: 61%

Firm predicted exchange rates and nonlinearities in pricing-to-market

Nguyen

Sato

2019

Journal of the Japanese and International Economies

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This paper employs the nonlinear autoregressive distributed lag (NARDL) model to investigate possible short-and long-run asymmetry in the pricing-to-market (PTM) behavior of Japanese exporters. In contrast to the conventional threshold specification, this study uses firms' predicted exchange rates, collected from a large-scale firm-level survey by the Bank of Japan, to distinguish between yen appreciation and depreciation periods. Using Japanese export price data at an industry level, we demonstrate that (1) the short-run PTM is almost complete and symmetric in all industries over the entire sample period from 1997 to 2015 and (2) during the latter sub-sample period from 2007 to 2015, Japanese exporters tend to engage in asymmetric PTM behavior in the long run. In the yen appreciation period, most industries choose incomplete but relatively strong long-run PTM. However, in the yen depreciation period, competitive industries tend to conduct complete PTM in the long run, while less-competitive industries tend to raise the degree of exchange rate pass-through (ERPT) in the long run. These empirical findings have important policy implications for the recent unresponsiveness of Japanese real exports to the substantial depreciation of the yen from the end of 2012.

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Section: Introductionsupporting

confidence: 61%

Firm predicted exchange rates and nonlinearities in pricing-to-market

Nguyen

Sato

2019

Journal of the Japanese and International Economies

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“…See Parsons and Sato (), Ceglowski (), Yoshida (), and Shioji () for recent studies on exchange rate pass‐through of Japanese trade. Ito et al .…”

mentioning

confidence: 99%

Industry‐specific Real Effective Exchange Rates and Export Price Competitiveness: The Cases of Japan, China, and Korea

Sato

Shimizu

Shrestha

et al. 2013

Asian Economic Policy Review

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This paper constructs a new dataset of the industry‐specific real effective exchange rate, based on the producer price indices, for Japan, China, and Korea on a monthly basis from January 2001 to February 2013 in order to provide a better indicator for export price competitiveness. By conducting simulation analysis, we found that Korean electrical machinery firms substantially improved their cost competitiveness by lowering their production costs during the Korean won appreciation period, while Japanese firms' large plant investment caused by management misjudgments led to excessive production capacity, which resulted in the deterioration of Japanese export competitiveness. A structural vector autoregression analysis also reveals that industry differences of cost competitiveness as well as nominal exchange rate changes have significant impact on export performances of Japan and Korea.

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“…The corresponding effects on bilateral passthrough rates should be the largest for trading partners for which machinery and transport equipment comprise a major part of their exports to the US such as Japan (Table 7). In fact, Ceglowski (2010) reports a significant rise in the response of total Japanese export prices to changes in the yen that can be traced to increases in the export price responses of electrical machinery and transport equipment. The decline in pass-through to US import prices from Japan found here could be the counterpart to those increases.…”

Section: Discussionmentioning

confidence: 99%