{
  "title": "Exchange Rate Pass-Through and Dynamic Oligopoly: An Empirical Investigation",
  "publication": "IMF Working Papers, April 1, 1999",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/exchange-rate-pass-through-and-dynamic-oligopoly-an-empirical-investigation-2938",
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  "summary": "This paper explicitly takes into account the dynamic oligopolistic rivalry among source producers to evaluate the degree of exchange rate pass-through.",
  "sections": [
    {
      "heading": "Research question and approach",
      "content": "- Objective: Evaluate the degree of exchange rate pass-through while explicitly accounting for dynamic oligopolistic rivalry among source producers.\n- Empirical case: Imported automobiles in Switzerland.\n- Methodology: Uses recent time-series techniques (as described in the paper) to identify pricing behavior under oligopolistic rivalry."
    },
    {
      "heading": "Key findings",
      "content": "- Prices are strategic complements.\n- The degree of pass-through is lower in the long run than in the short run.\n- Explanation provided: Although some rivals match long-term price changes, others do not, inducing the producer who faces a change in exchange rate to absorb a greater proportion of the variation."
    },
    {
      "heading": "Thematic classifications and keywords",
      "content": "- Subject: Asset prices, Currencies, Exchange rate adjustments, Exchange rate pass-through, Exchange rates, Foreign exchange, Money, Prices\n- Keywords: Asset prices; B. price rivalry; C. price dynamics; cost effect; cost model; cost variation; Currencies; exchange rate; Exchange rate adjustments; Exchange rate pass-through; Exchange rates; exogenous cost variable; interdependence matter; International trade; Oligopoly; price change; price decision; price effect; price interdependence; price series; WP"
    },
    {
      "heading": "Summary implications",
      "content": "- In dynamic oligopolistic markets for imported goods (example: automobiles in Switzerland), exchange rate shocks may be absorbed differently over horizons because rival firms’ heterogeneous long-run pricing responses alter the effective pass-through faced by the shock-exposed producer.\n- Short-run pass-through exceeds long-run pass-through in this setting, implying different inflationary and competitiveness dynamics over time following exchange rate movements.\n\nIMF Working Paper: Exchange Rate Pass-Through and Dynamic Oligopoly: An Empirical Investigation (Dominique M. Gross, Nicolas Schmitt; April 1, 1999; Working Paper No. 1999/047).\n\n---\n\n Content in this bundle\n\n- Exchange Rate Pass-Through and Dynamic Oligopoly: An Empirical Investigation -WP/99/47\n  - Exchange Rate Pass-Through and Dynamic Oligopoly: An Empirical Investigation -WP/99/47 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Exchange Rate Pass-Through and Dynamic Oligopoly: An Empirical Investigation -WP/99/47 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/exchange-rate-pass-through-and-dynamic-oligopoly-an-empirical-investigation-2938"
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    "Authors: Dominique M. Gross, Nicolas Schmitt",
    "Published: April 1, 1999",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451846621.001",
    "Objective: Evaluate the degree of exchange rate pass-through while explicitly accounting for dynamic oligopolistic rivalry among source producers.",
    "Empirical case: Imported automobiles in Switzerland.",
    "Methodology: Uses recent time-series techniques (as described in the paper) to identify pricing behavior under oligopolistic rivalry.",
    "Prices are strategic complements.",
    "The degree of pass-through is lower in the long run than in the short run.",
    "Explanation provided: Although some rivals match long-term price changes, others do not, inducing the producer who faces a change in exchange rate to absorb a greater proportion of the variation.",
    "Subject: Asset prices, Currencies, Exchange rate adjustments, Exchange rate pass-through, Exchange rates, Foreign exchange, Money, Prices",
    "Keywords: Asset prices; B. price rivalry; C. price dynamics; cost effect; cost model; cost variation; Currencies; exchange rate; Exchange rate adjustments; Exchange rate pass-through; Exchange rates; exogenous cost variable; interdependence matter; International trade; Oligopoly; price change; price decision; price effect; price interdependence; price series; WP",
    "In dynamic oligopolistic markets for imported goods (example: automobiles in Switzerland), exchange rate shocks may be absorbed differently over horizons because rival firms’ heterogeneous long-run pricing responses alter the effective pass-through faced by the shock-exposed producer.",
    "Short-run pass-through exceeds long-run pass-through in this setting, implying different inflationary and competitiveness dynamics over time following exchange rate movements.",
    "**Exchange Rate Pass-Through and Dynamic Oligopoly: An Empirical Investigation -WP/99/47**"
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