Dario Fauceglia, Anirudh Shingal, Martin Wermelinger, 19 October 2012

Recent literature on the role of imported inputs in exchange-rate adjustments of exports implicitly assumes full exchange-rate pass-through into imported input prices, which is a rather strong assumption. This column uses intermediate input prices to investigate the effect of exchange-rate fluctuations in Switzerland. It suggests an appreciation of the currency leads to higher profit margins through the import channel and imported inputs act as a natural means for hedging exchange-rate risks.


CEPR Policy Research