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Author: | Gross, D. Schmitt, N. |
Title: | Exchange rate pass-through and dynamic oligopoly: an empirical investigation |
Journal: | Journal of International Economics
2000 : OCT, VOL. 52:1, p. 89-112 |
Index terms: | INTERNATIONAL ECONOMICS OLIGOPOLY EXCHANGE RATES |
Language: | eng |
Abstract: | This paper explicitly takes into account the dynamic oligopolistic rivalry among source producers to evaluate the degree of exchange-rate pass-through. Using recent time-series techniques for the case of imported automobiles in Switzerland, the results show that prices are strategic complements and that the degree of pass-through is lower in the long run than in the short run. This is due to the fact that, 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. |
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