Importers, exporters, and exchange rate disconnect

Mary Amiti, Oleg Itskhoki, Jozef Konings

Research output: Contribution to journalArticle

93 Citations (Scopus)

Abstract

Large exporters are simultaneously large importers. We show that this pattern is key to understanding low aggregate exchange rate pass- through as well as the variation in pass-through across exporters. We develop a theoretical framework with variable markups and imported inputs, which predicts that firms with high import shares and high market shares have low exchange rate pass-through. We test and quantify the theoretical mechanism using Belgian firm-product-level data on imports and exports. Small nonimporting firms have nearly complete pass-through, while large import-intensive exporters have pass-through around 50 percent, with the marginal cost and markup channels contributing roughly equally.

Original languageEnglish
Pages (from-to)1942-1978
Number of pages37
JournalAmerican Economic Review
Volume104
Issue number7
DOIs
Publication statusPublished - 2014
Externally publishedYes

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Exporters
Pass-through
Import
Importer
Exchange rate disconnect
Exchange rate pass-through
Markup
Theoretical framework
Market share
Small firms
Marginal cost
Markups

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Importers, exporters, and exchange rate disconnect. / Amiti, Mary; Itskhoki, Oleg; Konings, Jozef.

In: American Economic Review, Vol. 104, No. 7, 2014, p. 1942-1978.

Research output: Contribution to journalArticle

Amiti, M, Itskhoki, O & Konings, J 2014, 'Importers, exporters, and exchange rate disconnect', American Economic Review, vol. 104, no. 7, pp. 1942-1978. https://doi.org/10.1257/aer.104.7.1942
Amiti, Mary ; Itskhoki, Oleg ; Konings, Jozef. / Importers, exporters, and exchange rate disconnect. In: American Economic Review. 2014 ; Vol. 104, No. 7. pp. 1942-1978.
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