Pass-Through of Imported Input Prices to Domestic Producer Prices: Evidence from Sector-Level Data
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Summary:
Motivated by stylized facts pointing to a dominant role of imported inputs in transmitting external price shocks to domestic prices, this paper zooms in to study the pass-through of imported input costs to domestic producer prices. Our approach constructs effective input price indices from sector-level price data combined with sector-level information on input-output linkages. Applying an error correction model specification to sector-level output and input prices, the long-run pass-through rate of effective imported input costs to domestic producer prices is estimated to be around 70 percent in Korea and almost 100 percent in selected European countries.
Series:
Working Paper No. 2016/023
Subject:
Import price indexes Import prices Inflation Prices Producer price indexes Producer prices
English
Publication Date:
February 12, 2016
ISBN/ISSN:
9781475522280/1018-5941
Stock No:
WPIEA2016023
Pages:
24
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