On the Seemingly Incompleteness of Exchange Rate Pass-Through to Import Prices: Do Globalization and/or Regional Trade Matter?

  • Antonia López-Villavicencio
  • Valérie MignonEmail author
Part of the Dynamic Modeling and Econometrics in Economics and Finance book series (DMEF, volume 27)


This paper assesses the impact of globalization and regionalization on exchange rate pass-through (ERPT) into import prices in three core eurozone countries. To this end, we consider various indicators of globalization and rely on both aggregated (i.e., country level) and disaggregated (i.e., good level) data. Using quarterly data since 1992, we do not find compelling evidence that global factors cause a structural change in the degree of exchange rate pass-through. Indeed, increased trade openness or lower trade tariffs push up ERPT in some sectors, though results are quite sparse. However, regionalization, defined as a higher proportion of intra-EU imports’ share in total imports, reduces the pass-through in a more generalized way. Most importantly, we show that ERPT incompleteness generally observed in the literature is in appearance only and not at play when intra-EU trade is controlled for. Overall, our findings show that ERPT is complete and significant in numerous sectors, meaning that exchange rate changes still exert important pressure on domestic prices.


Exchange rate pass-through Import prices Globalization Eurozone 

JEL Classification

E31 F31 F4 C22 



We would like to thank Anne-Laure Delatte and Sébastien Jean for helpful remarks and suggestions.


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Copyright information

© Springer Nature Switzerland AG 2021

Authors and Affiliations

  • Antonia López-Villavicencio
    • 1
  • Valérie Mignon
    • 1
    • 2
    Email author
  1. 1.EconomiX-CNRSUniversity of Paris NanterreNanterreFrance
  2. 2.CEPIIParisFrance

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