Description

Motivated by stylized facts pointing to a dominant role of imported inputs in transmitting
 external price shocks to domestic prices, this paper zooms in to study the pass-through of
 imported input costs to domestic producer prices. Our approach constructs effective input
 price indices from sector-level price data combined with sector-level information on
 input-output linkages. Applying an error correction model specification to sector-level
 output and input prices, the long-run pass-through rate of effective imported input costs to
 domestic producer prices is estimated to be around 70 percent in Korea and almost 100
 percent in selected European countries.

More publications in this series: Working Papers

More publications by: JaeBin Ahn ; Chang-Gui Park ; Chanho Park