PRICING EXPORTS - A CROSS-COUNTRY STUDY

This paper applies cointegration and error correction analysis to estimate the long-run steady state and short-run dynamic relationships between the exchange rate and export prices in industrial and newly industrializing economies. The data-coherent analysis allowing the endogeneity of domestic cost and the exchange rate shows that the exchange rate has smaller effects on the export price than previous studies would indicate. It contradicts some widely-accepted relationships-e.g., smaller, more open countries have greater coefficients of pass-through. The results also exhibit important differences among the USA, Japan, and Germany in their export pricing behavior.