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|Abstract:||Large exporters are simultaneously large importers. We show that this pattern is key to understanding low aggregate exchange rate pass-through as well as the variation in pass-through across exporters. We develop a theoretical framework with variable markups and imported inputs, which predicts that firms with high import shares and high market shares have low exchange rate pass-through. We test and quantify the theoretical mechanism using Belgian firm-product-level data on imports and exports. Small nonimporting firms have nearly complete pass-through, while large import-intensive exporters have pass-through around 50 percent, with the marginal cost and markup channels contributing roughly equally.|
|Citation:||Amiti, Mary, Itskhoki, Oleg, Konings, Jozef. (2014). Importers, Exporters, and Exchange Rate Disconnect. American Economic Review, 104 (7), 1942 - 1978. doi:10.1257/aer.104.7.1942|
|Pages:||1942 - 1978|
|Type of Material:||Journal Article|
|Journal/Proceeding Title:||American Economic Review|
|Version:||Final published version. Article is made available in OAR by the publisher's permission or policy.|
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