PASS-THROUGH (PT)

International economists usually call pass-through period the interval within which the domestic price of foreign goods adjusts to the exchange rate changes. The pass-through period is consistent with the existence of the so-called J-curve. Indeed, empirical evidence suggests that prices of imported goods, expressed in local currency, display some rigidity with respect to exchange rate variations. That is because producers prefer to keep stable quantities and to decrease their mark-up rather than raise the price. This suggests the existence of non-competitive markets.
Editor: Lorenzo CARBONARI
© 2009 ASSONEBB