Pass-Through of Imported Input Prices to Domestic Producer Prices : Evidence from Sector-Level Data

Author/Editor:

JaeBin Ahn ; Chang-Gui Park ; Chanho Park

Publication Date:

February 12, 2016

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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. 16/23

English

Publication Date:

February 12, 2016

ISBN/ISSN:

9781475522280/1018-5941

Stock No:

WPIEA2016023

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

24

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