Publication Date

January 1999

Publication Details

Webber, AG, Dynamic and long run responsens of import prices to the exchnage rate in the Asia-Pacific, Working Paper 99-11, Department of Economics, University of Wollongong, 1999.


Differentials in the estimate of long run import pass-through is investigated for 9 countries of the Asia-Pacific in conjunction with the estimation of the short run dynamics. This is undertaken using the Johansen procedure, which tests for the possibility of multiple cointegrating vectors and then uses this information to estimate a restricted vector error correction specification. The rank tests indicate that 7 out of the 9 countries had long run cointegrating relationships from which estimates of pass-through could be found. The long run import pass-through responses are significantly diverse, ranging from the perverse case of 109% for Pakistan to 26% for Australia. The short run responses also reveal a relatively slow, albeit statistically significant, adjustment of import prices to alterations in the exchange rate, with most of the adjustment in import prices occurring in the periods after the exchange rate shock.