Exchange Rate Pass-through: Evidence from China

Open Access
Author:
Jones, Corinne Louise
Area of Honors:
Economics
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Kala Krishna, Thesis Supervisor
  • David Shapiro, Honors Advisor
Keywords:
  • exchange rate pass-through
  • processing trade
  • import intensity
Abstract:
In this paper, I examine the extent and causes of pass-through for Chinese manufacturing firms using Chinese firm-level and customs data from 2000-2006. While previous work suggests that import intensity and market share should be important predictors of pass-through, I find that this is not the case in China for general trade firms and only sometimes true for processing firms. In particular, I find that for processing firms, market share is only a significant predictor of pass-through when examining a firm's most profitable 4-digit HS category. Additionally, pass-through varies significantly across types of processing firms, with import-and-assembly firms having much higher pass-through than pure-assembly firms.