The adjustment of global external balances: Does partial exchange-rate pass-through to trade prices matter?

• 成果类型: Article
• 署名作者: Gust, Christopher; Leduc, Sylvain; Sheets, Nathan
• 署名单位: Federal Reserve System - USA; Federal Reserve System Board of Governors; Federal Reserve System - USA; Federal Reserve Bank - San Francisco
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2009.08.002
• 发表日期: 2009
• 页码: 173-185
• 关键词: Exchange-rate pass-through; Trade prices; Trade balance

摘要

This paper assesses whether partial exchange-rate pass-through to trade prices has important implications for the prospective adjustment of global external imbalances. To address this question, we develop and estimate an open-economy DSCE model in which pass-through is incomplete due to the presence of local currency pricing, distribution services, and a variable demand elasticity that leads to fluctuations in optimal markups. We find that the overall magnitude of trade adjustment is similar in a low and high pass-through environment with more adjustment in a low pass-through world occurring through movements in the terms of trade rather than real trade flows and through a larger response of the exchange rate. Published by Elsevier B.V.