Advertisement

Journal of Economics and Finance

, Volume 27, Issue 3, pp 396–403 | Cite as

A note on transfer prices and exchange rate pass-through

  • Charles E. Hegji
Article

Abstract

The paper builds a model of a parent corporation selling an intermediate product to a foreign subsidiary. The model is used to explain the response of foreign prices to changes in the exchange rate between the country of the parent affiliate and the foreign subsidiary. The model examines this response with and without an external market for the intermediate product.

Keywords

Exchange Rate Foreign Market Price Elasticity Transfer Price Parent Firm 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Antzoulatos, Angelos A., and Jaiwen Yang. 1996. “Exchange Rate Pass-Through in U.S. Manufacturing Industries: A Demand-Side Story.”International Trade Journal 10 (3): 325–352.Google Scholar
  2. Baldwin, Richard. 1988. “Hysterisis in Import Prices: The Beachhead Effect.”American Economic Review 78: 773–85.Google Scholar
  3. Betts, Caroline, and Michael B. Devereaux. 1996. “The Exchange Rate in a Model of Pricing to Market.”European Economic Review. 40: 1007–1022CrossRefGoogle Scholar
  4. Bodnar, Gordon M., Bernard Dumas, and Richard C. Marston. 2002. “Pass-Through and Exposure.”Journal of Finance 57 (1): 199–231.CrossRefGoogle Scholar
  5. Dixit, Avinash K. 1989. “Hysterisis, Import Penetration, and Exchange Rate Pass-Through.”Quarterly Journal of Economics 104: 205–228.CrossRefGoogle Scholar
  6. Dornbusch, Rudiger. 1987. “Exchange Rates and Prices.”American Economic Review 77: 93–106.Google Scholar
  7. Froot, Kenneth A., and Paul D. Klemperer. 1989. “Exchange Rate Pass-Through When Market Share Matters.”American Economic Review 79: 637–54.Google Scholar
  8. Goldberg, Pinelopi Koujianou, and Michael M. Knetter. 1997. “Goods Prices and Exchange Rates: What Have We Learned?”Journal of Economic Literature 35: 1243–72.Google Scholar
  9. Hooper, Peter, and Catherine L. Mann. 1989. “Exchange Rate Pass-Through in the 1980s: The Case of U.S. Imports of Manufacturers.”Brookings Papers on Economic Activity 1: 297–329.CrossRefGoogle Scholar
  10. Hung, Juann H. 1997. “The Exchange Rate's Impact on Overseas Profits of U.S. Multinationals”.Journal of Economics and Business 439–458.Google Scholar
  11. Kasa, Kenneth. 1992. “Adjustment Costs and Pricing to Market: Theory and Evidence.”Journal of International Economics 32: 1–30.CrossRefGoogle Scholar
  12. Knetter, Michael M. 1989. “Price Discrimination by U.S. and German Exporters.”American Economic Review 79: 198–210.Google Scholar
  13. Krugman, Paul R. 1987. “Pricing to Market When the Exchange Rate Changes”. InReal-Financial Linkages among Open Economies, edited by Sven W. Arndt and J. David Richardson. Cambridge, Mass: MIT Press.Google Scholar
  14. Mansfield, Edwin. 1996.Managerial Economics: Theory, Applications, and Cases. 3rd Edition. New York: W. W. Norton and Company.Google Scholar
  15. Marston, Richard C. 1992. “Pricing to Market in Japanese Manufacturing”.Journal of International Economics 29: 217–236.CrossRefGoogle Scholar
  16. Rangan, S., and Robert Lawrence. 1993. “The Responses of U.S. firms to Exchange Rate Fluctuations: Piercing the Corporate Veil.”Brookings Papers on Economic Activity 2: 341–379.CrossRefGoogle Scholar
  17. Waterson, Michael. 1984.Economic Theory of the Industry. Cambridge, U.K.: Cambridge University Press.Google Scholar
  18. Yang, Jaiwen. 1997. “Exchange Rate Pass-Through in U.S. Manufacturing Industries”.Review of Economics and Statistics 79: 95–103.CrossRefGoogle Scholar

Copyright information

© Springer 2003

Authors and Affiliations

  • Charles E. Hegji
    • 1
  1. 1.Department of EconomicsAuburn University at MontgomeryMontgomery

Personalised recommendations