Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/267573 
Year of Publication: 
2019
Citation: 
[Journal:] Baltic Journal of Economics [ISSN:] 2334-4385 [Volume:] 19 [Issue:] 2 [Publisher:] Taylor & Francis [Place:] London [Year:] 2019 [Pages:] 276-295
Publisher: 
Taylor & Francis, London
Abstract: 
Numerous empirical studies suggest that the responses of prices to exchange rate movements are muted, i.e. the exchange rate pass-through is incomplete. In this study we investigate whether this result can be explained by inaction to small changes in the exchange rate, in which case the incompleteness would constitute merely an artefact introduced by the linear specification of the pass-through equation. The results obtained for Polish industry show significant sign- and size-dependence in the sensitivity of export prices to exchange rate movements, but only in a few cases they fully account for the incompleteness of the pass-through. The tendency for inaction is to a large extent determined by industry's characteristics, with sectors more technologically advanced and more involved in international activities, more willing or able to absorb exchange rate movements in their markups, thereby stabilizing their prices in the destination markets.
Subjects: 
band of inaction
Exchange rate pass-through
non-linear ARDL
non-linear cointegration
JEL: 
C32
E31
F14
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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