Exchange Rate Pass-Through, Currency Invoicing and Trade Partners

This paper investigates the pass-through from changes in exchange rates to import prices using a new and unique micro data set on Canadian imports over a six-year time span. The paper focuses on apparel imports and we begin by studying the relationship between exchange rate pass-through and the currency of invoicing of the imported good. Our preliminary ndings support the theoretical literature indicating that the invoicing currency has a large impact on exchange rate pass-through. Pass-through is signicantly higher for U.S. dollar invoiced goods than for Canadian dollar invoiced goods. In general, we nd large estimates of exchange rate pass-through into import prices over this period. In addition,