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Title: |
Exchange Rate Pass-Through: Australian Imports
of Motor Vehicles |
| Author: |
Menon, Jayant |
| Author
Affiliation: |
Monash U |
| Source: |
International Economic Journal, Autumn 1993, v. 7, no. 3, pp. 93-109 |
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Publication Date: |
Autumn 1993 |
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Abstract: |
The study examines the pass-through
relationship of exchange rate changes to prices of Australian imports of
passenger motor vehicles (PMVs) for the period 1981.3 to 1990.2. A model
that relates the import pricing decision to changes in the exchange
rate, production costs, and competing prices is estimated. Having
identified a cointegrating relationship, the Engle-Granger two-step
procedure is employed to estimate the model. Unlike previous findings,
our results suggests that the pass-through of exchange rate changes to
import prices is incomplete in the long run. The presence of
quantitative restrictions (QRs) and the pricing practices on intra-firm
sales of multinational firms are put forward as possible explanations
for the incomplete pass-through finding. |
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