Decomposition of CPI sensitivity to exchange rate fluctuations.
Cumulative change in the US Import Price Index, 1989-2006.
Bunching of profits forecast errors, 1990-2018 Compustat-IBES.
Work in Progress
Importer's Dynamics and Exchange Rate Pass-through - Draft Coming Soon
This paper examines the role of importers' dynamics on the transmission of exchange rate fluctuations to international prices. Using import transaction data from Chile, I document novel empirical facts on importers' dynamics and exchange rate pass-through: as the importer grows older, i) market share and imported quantity (price) increases (decreases) and ii) the exchange rate pass-through into import prices decreases. I rationalize these findings proposing a model of international oligopsony: as importers grow older and larger, they gain experience in foreign markets which allows to exert stronger market power on foreign suppliers. Older importers have stronger market power and pay a markdown price, which allow to keep prices stable and lower the exchange rate pass-through. My estimates imply that the presence of experienced importers insulated domestic prices during the sharp depreciation of the Chilean peso following the 2019 Estallido Social. Moreover, the rise in the average importers' experience from 2009 to 2019 accounts for 40% of the negative trend in CPI sensitivity to exchange rate fluctuations.