Exchange Rate Pass‐Through: Testing the Small Country Assumption for Australia*

This paper examines exchange rate pass‐through for the prices of imports and manufactured exports. It is found that, in the long run, exchange rate pass‐through over the docks is complete for both classes of good. However, pass‐through to import prices is more rapid than that to manufactured export prices. Also, evidence is presented of a substantial increase in pass‐through to manufactured export prices, in keeping with increased international integration.