Capital Importers Pay More for Their Imports

25 Pages Posted: 5 Feb 2012

See all articles by Antonis Adam

Antonis Adam

University of Ioannina - Department of Economics

Thomas Moutos

Athens University of Economics and Business - Department of International and European Economic Studies; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: January 31, 2012

Abstract

We examine the effects that a country’s net capital flows have on the (border) prices that a country pays for its imports of goods. Using data from 2000 to 2009 for 11 euro area countries we utilize a pricing-to-market specification to study exporters’ pricing behavior to the rest of the countries in the sample, at the industry level, for 900 goods disseminated at the 4- digit Standard International Trade Classification (SITC- revision 3) level. This allows us to construct a panel dataset which contains observations across exporters, importers, industries and time, ending up with a total of 594,327 observations. We find a strong influence of the importing country’s net capital inflows on the border prices of its imports of goods. This result is robust across different specifications of the underlying model, as well to different sample dis-aggregations across types of capital flows, product categories, and exporters.

Keywords: capital flows, import prices, pricing to market, globalization, euro area

JEL Classification: F320, F340, F360

Suggested Citation

Adam, Antonis and Moutos, Thomas, Capital Importers Pay More for Their Imports (January 31, 2012). CESifo Working Paper Series No. 3723, Available at SSRN: https://ssrn.com/abstract=1998053 or http://dx.doi.org/10.2139/ssrn.1998053

Antonis Adam

University of Ioannina - Department of Economics ( email )

45110 Ioannina
Greece
(+30)2651097437 (Phone)

HOME PAGE: http://users.uoi.gr/aadam

Thomas Moutos (Contact Author)

Athens University of Economics and Business - Department of International and European Economic Studies ( email )

76 Patission Street
GR-10434 Athens
Greece

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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