edoc

Endogenous Product Adjustment and Exchange Rate Pass-Through

Freitag, Andreas and Lein, Sarah. (2022) Endogenous Product Adjustment and Exchange Rate Pass-Through. WWZ Working Paper, 2022 (09).

[img] PDF - Published Version
1262Kb

Official URL: https://edoc.unibas.ch/90343/

Downloads: Statistics Overview

Abstract

We document how product quality responds to exchange rate movements and quantify the extent to which these quality changes affect the aggregate pass-through into export prices. We analyze the substantial sudden appreciation of the Swiss franc post removal of the 1.20-CHF-per-euro lower bound in 2015 using export data representing a large share of the universe of goods exports from Switzerland. We find that firms upgrade the quality of their products after the appreciation. Furthermore, they disproportionately remove lower-quality products from their product ranges. This quality upgrading and quality sorting effect accounts for a substantial share of the total pass-through one year after the appreciation. We cross-check our results with the microdata underlying the Swiss export price index, which includes an adjustment factor for quality based on firms' reported product replacements, and obtain similar results.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Makroökonomie (Lein)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Freitag, Andreas and Lein, Sarah M.
Item Type:Working Paper
Publisher:WWZ
Number of Pages:38
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
Identification Number:
  • handle: RePEc:bsl:wpaper:2022/09
edoc DOI:
Last Modified:24 Nov 2022 07:50
Deposited On:24 Nov 2022 07:50

Repository Staff Only: item control page