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Erschienen in:

07.10.2022

Firm specific pass through and heterogeneity

verfasst von: Zahra Sheidaei

Erschienen in: Journal of Economics and Finance | Ausgabe 1/2023

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Abstract

In this paper, a simple and tractable model of cost pass through is presented to explain the rate of transmission of exchange rate variations to the markups of exporting firms. The explanation is based on the assumption of endogenous firms, endogenous markups and variable marginal cost. A key feature of the model is that pass-through is firm-specific and depends on the degree of firm’s technology of production. The model predicts that high performance firms have higher markups as they pass more their cost into their exporting prices. It is also found out that in response to an exchange rate variation higher performance firms tend to absorb more these changes into their markups. The predictions of the model confirmed by the empirical evidence on the firm-level data of non-petroleum manufacturing of Iran over the period of 2002-2007.

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Metadaten
Titel
Firm specific pass through and heterogeneity
verfasst von
Zahra Sheidaei
Publikationsdatum
07.10.2022
Verlag
Springer US
Erschienen in
Journal of Economics and Finance / Ausgabe 1/2023
Print ISSN: 1055-0925
Elektronische ISSN: 1938-9744
DOI
https://doi.org/10.1007/s12197-022-09603-w

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