Pricing to Market of Italian Exporting Firms

45 Pages Posted: 13 Jul 2006

See all articles by Roberto Basile

Roberto Basile

University of L'Aquila - Faculty of Economics

Sergio de Nardis

Istituto di Studi e Analisi Economica (ISAE)

Alessandro Girardi

National Institute of Statistics (ISTAT)

Date Written: June 2006

Abstract

This paper investigates the pricing-to-market (PTM) behaviour of Italian exporting firms, using quarterly survey data by sector and by region over the period 1999q1-2005q2. A partial equilibrium imperfect competition model provides the structure according to which the orthogonality of structural shocks is derived. Impulse-response analysis shows non-negligible reactions of export domestic price margins to unanticipated changes in cost competitiveness and in foreign and domestic demand levels, even though these effects appear to be of a transitory nature. For the period 1999-2001 a typical PTM behaviour emerges, while during the most recent years favourable foreign demand conditions allowed firms to increase their export-domestic price margins in face of a strong deterioration of their cost competitiveness. Macroeconomic implications of the observed PTM behaviour are also discussed.

Keywords: Pricing to market, survey data, panel-VAR models

JEL Classification: E30, F31, F41

Suggested Citation

Basile, Roberto and de Nardis, Sergio and Girardi, Alessandro, Pricing to Market of Italian Exporting Firms (June 2006). ISAE Working Paper No. 70, Available at SSRN: https://ssrn.com/abstract=913699 or http://dx.doi.org/10.2139/ssrn.913699

Roberto Basile (Contact Author)

University of L'Aquila - Faculty of Economics ( email )

Roio Poggio, 67040
Italy

Sergio De Nardis

Istituto di Studi e Analisi Economica (ISAE) ( email )

Piazza dell' Indipendenza 4
I-00185
Italy

Alessandro Girardi

National Institute of Statistics (ISTAT) ( email )

Via Cesare Balbo 16
00184 Rome, 0185
Italy

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