DISCUSSION PAPER
July 2008
No.31
A New Evidence for Exchange Rate Pass-through:
Disaggregated Trade Data from Local Ports
Yushi Yoshida
Faculty of Economics
Kyushu Sangyo University
A New Evidence for Exchange Rate Pass-through:
Disaggregated Trade Data from Local Ports
July 2008
Yushi Yoshida*
Faculty of Economics
Kyushu Sangyo University
[Abstract]
For the estimation of exchange rate pass-through (henceforth ERPT), except for few
evidences based on firm-level data, even the most disaggregated level of national export data
is still biased with aggregation over sub-regions within an exporting country. We investigate
to what extent this aggregation within product category is biased by comparing ERPT
estimates across local ports. We use monthly exports at the HS 9-digit level from January
1988 to December 2005 for five major Japanese ports. In a panel data regression framework
we control for exporting industry and importing country. Statistical tests provide strong
evidence that export prices are set at different levels across local ports and that they
correspond differently with respect to fluctuations of exchange rates.
JEL classification code: F14, F31, F41.
Keywords: Exchange rate pass-through; Firm heterogeneity; Japanese trade; Port-level trade;
Pricing-to-market.
* 2-3-1 Matsukadai, Higashi-ku, Fukuoka, 813-8503 Japan. e-mail: yushi@ip.kyusan-u.ac.jp.
Tel: 81-92-673-5220. I would like to thank Helena Marques for her suggestions for
improvements on the earlier version of this paper and participants at the All China Economy
conference and the INFER workshop for helpful comments.
1. Introduction
The exchange rate pass-through (ERPT) measures the corresponding
change in the price of traded goods with respect to changes in the exchange rate.
The empirical evidence for ERPT prior to the 1980s is based on aggregated data
more focused on macroeconomic