Estimates of Exchange Rate Pass-through with Product-level Data

Estimates of Exchange Rate Pass-through with Product-level Data

19/22

Yusuf Emre Akgündüz, Emine Meltem Baştan, Ufuk Demiroğlu, Semih Tümen

English

August 2019

We estimate the export and import pass-through rates using product-level data from Turkey. We find that the Turkish lira (TRY) exchange rate changes are mostly passed on to TRY prices of exports and imports–and therefore modestly to their prices in trading partners’ currencies. The rate of average pass-through to TRY-prices is 89% for imported goods and 82% for exported goods, with no apparent lags in the impact. Pass-through estimates by sector show variation and are relatively low for food and agricultural products. We argue that the highly-detailed productlevel data enable us to estimate the pass-through rates with better reliability and precision than we could by using only aggregated time-series data. We also introduce a pooled equation to estimate the difference between the export and import pass-through rates–a potentially useful statistic–in a way that allows statistical inference.

Exchange rate pass-through, Product-level estimates, Turkish export prices, Turkish import prices

F14; F31; F41