Import prices and invoice currency: Evidence from Chile

Abstract

BIS Working Papers are written by members of the Monetary and Economic Department of the Bank for International Settlements, and from time to time by other economists, and are published by the Bank. The papers are on subjects of topical interest and are technical in character. The views expressed in them are those of their authors and not necessarily the views of the BIS. This publication is available on the BIS website (www.bis.org).

Invoicing currency, exchange rate pass‐through, and value‐added trade: The case of Turkey

“…Compared to the earlier studies, our findings for Turkey's overall imports and exports are lower than those for developed countries, such as Canada (0.484 in Devereux et al, 2017) and New Zealand (0.475 in Fabling & Sanderson, 2015), for Chile (0.95 in Giuliano & Luttini, 2020), for developed (average import price passthrough = 0.60, average export price pass-through = 0.39), and emerging countries (average import price passthrough = 0.54, average export price pass-through = 0.51). However, they are higher than those for East Asian countries, including Indonesia, Malaysia, Philippines and Thailand (Parsons & Sato, 2006).…”

“…Similarly, both short‐ and long‐run pass‐through to import (export) prices is lower (higher) in developed than emerging countries, while pass‐through is affected by the share of the exporter's currency in invoicing. Giulino and Luttini (Giuliano & Luttini, 2020) concluded that choice of exporter currency against the U.S dollar affects medium‐term exchange rate pass‐through in Chile. Abdulqadir (2022) reported that depending on the real income, trade openness and terms of trade, there exist asymmetric pass‐through effect on the exporter's currency invoice in 44 sub‐Saharan African countries.…”

Why Follow the Fed? Monetary Policy in Times of US Tightening

“…The magnitude of this exchange rate pass-through depends, again, on country-specific macroeconomic characteristics, including the volatility of the exchange rate and the credibility of monetary policy (Ha et al, 2019). But, in spite of this heterogeneity, the vast majority of countries will experience some increase in inflation, with one-year passthrough estimates ranging from 0.05 all the way to 0.5 (Sopromadze et al, 2021;Giuliano and Luttini, 2019;Goldfajn and Werlang, 2000).…”

The Dollar and Emerging Market Economies: Financial Vulnerabilities Meet the International Trade System

“…For Argentina and Colombia, I obtain the data from Gopinath (2016). For Chile, I obtain the data from Labbe (2018) and Giuliano and Luttini (2019). For Peru, I obtain the data from Castellares (2017).…”

“…Exposure IndicesSource: Author's calculations based on national sources, BIS,Kamps (2006),Goldberg and Tille (2009),Gopinath (2016),Castellares (2017),Labbe (2018), andGiuliano and Luttini (2019).…”