Exchange Rate Pass-through and Market Power: Empirical analysis on Japanese automobile exports

This paper investigates exchange rate pass-through in Japanese automobile exports. Using customs data, we show that the exchange rate pass-through into import goods are lower in developed countries. Interviews with automobile companies were conducted by the members of RIETI's Asian currency project, and the results show that the key element for determining pass-through of exchange rates is market power. This paper also examines whether it is affected by market power. We make several market indexes and compare those with the exchange rate pass-through.