Exchange Rate Pass-Through Effects: A Disaggregate Analysis Of Colombian Imports Of Manufactured Goods

This paper quantifi es the exchange rate passthrough effects on import prices within a sample of Colombian manufactured imports. Also, whether the foreign exchange and infl ation regimes affect the degree of pass-through is evaluated. The analytical framework used was a mark-up model. The main fi nding is that the long-run pass-through elasticities are stable and go from 0.1 to 0.8 and the short-run ones are unstable and go from 0.1 to 0.7, supporting mark-up hypotheses, in contrast to the hypotheses of perfect market competition and complete pass-through. The fi ndings also show evidence of the variabiliTY and different degrees of pass-trough among manufacturing sectors, which confi rm the importance of using dynamic models and disaggregate data for an analysis of the pass-through. Both, the hypothesis that under a fl oating regime there is a low degree of pass-through and the hypothesis that a low infl ation environment has the same result are not supported.

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