ERF 26th Annual Conference

Product-level Estimates of Exchange Rate Pass-through: Evidence from Turkey

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No.

ERF26_212

Publisher

ERF

Date

September, 2020

Topic

F4. Macroeconomic Aspects of International Trade and Finance

F3. International Finance

F1. Trade

Abstract
Author(s)

We estimate the export and import exchange rate pass-through using product-level data from Turkey. We find that the Turkish lira (TRY) exchange rate changes are mostly passed on to TRYprices of exports and imports–and therefore modestly to their FX prices. The rate of average pass-through to TRY-prices is 89 percent for imported goods and 82 percent for exported goods, with no apparent lags in the impact. Pass-through estimates vary from sector to sector and are particularly low for food and agricultural products, falling to the 0.5-0.7 range in that group, while ranging between 0.8-1.0 in other sectors. We argue that the highly-detailed product-level data enable us to estimate the pass-through rates with better reliability and precision than we could by using aggregated time-series data. We also introduce a pooled equation to estimate the difference in the export and import pass-through rates, which is a useful statistic facilitating econometric inference.

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Product-level Estimates of Exchange Rate Pass-through: Evidence from Turkey

Authors

Yusuf Emre Akgündüz

Faculty Member, Faculty of Arts and Social...

Authors

Emine Meltem Bastan

Central Bank of the Republic of Turkey

Authors

Ufuk Demiroglu

Central Bank of the Republic of Turkey

Research Fellows

Semih Tumen

Professor of Economics, TED University, Turkey

Product-level Estimates of Exchange Rate Pass-through: Evidence from Turkey

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