Lins, Julyan Gleyvison Machado Gouveia; Ciríaco, Juliane da Silva; Sousa, Cinthia Barbosa
Abstract:
The article intends to analyze the relation between exchange and prices of the Brazilian retail sectors between 2005 and 2016. The work starts from the theoretical foundation that the magnitude of imperfect exchange rate transfer to the domestic price level depends on sectoral characteristics such as the market power on the part of the firms, the slope of the sectoral demand curve, mark up adjustment by the bidders, as well as the characteristics of vertical integration and strategic behavior within the productive chains of each sector. The model proposed by Campa and Goldberg (2005) was used to quantify the degree of exchange rate pass-through to the price level, and the estimation was made using the error correction vector (VEC). The results corroborate the evidence that the exchange rate pass-through is imperfect to the level of domestic prices and that it varies substantially between sectors, a fact that suggests different dynamics of price adjustment among the retail branches, due to exchange shocks.
