Global value chains and exchange rate pass-through—The role of non-linearities

نویسندگان

چکیده

This paper examines the role of global value chains development in reducing exchange rate pass-through (ERPT) to import and producer prices. In contrast existing research, we assume that decline ERPT resulting from enhanced participation GVC may be non-linear with respect country’s position chain due different firms’ market power at various stages vertical specialization. We investigate a panel 43 advanced emerging economies using smooth transition regression model WIOD data. find growing backward suppliers imported intermediate input results reduction prices importing country. Moreover this effect is non-linear. The for countries whose are strongly involved production along significantly (four times) smaller than not participating GVC. also document aggregate recent years resulted mainly changes occurring EU member states increased their major trading partners, while other has fact remained roughly unchanged throughout analyzed period.

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ژورنال

عنوان ژورنال: International Review of Economics & Finance

سال: 2022

ISSN: ['1059-0560', '1873-8036']

DOI: https://doi.org/10.1016/j.iref.2022.05.009