Exchange rate pass-through to import prices: Accounting for changes in the Eurozone trade structure
Résumé
This paper assesses the effect of the emergence of new trading partners (i.e., China and Eastern Europe) on the exchange rate pass-through (ERPT) to import prices in eurozone countries. To this end, we rely on bilateral data on imports of manufactured goods at the two-digit sector level over the 2000-2018 period. We find that (i) pass-through is complete in many cases, (ii) ERPT from China is higher than from the United States, and (iii) there is no generalized link between ERPT and the increasing integration of some emerging markets in European imports. We also show that the launch of the single currency has not provoked a sufficient change in the part of trade exposed to exchange rate fluctuations and, therefore, has not affected the pass-through.