NY Fed research links exchange rate pass-through and mark-ups

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In a new staff paper published by the Federal Reserve Bank of New York, Adam Copeland and James A Kahn look at inventory-sales ratios of imported cars as a counterpart to mark-ups, which are difficult to observe.

They find evidence that "inventory-sales ratios of imported vehicles respond to exchange rate movements to a degree consistent with pass-through on the order of 50–75%."

This, the authors note, is "on the high end of the range found in the literature".

Click here to read the paper.

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