# **4.2 Results**

Table 3, columns (1) to (7) reports baseline least-squares estimates of equation (3) for the whole sample as well as for separate regions and countries.<sup>24</sup> All specifications control for firm _×_ product _×_ destination and origin _×_ year fixed effects (equation (3)). We also replicate Table 3 replacing the latter set of fixed effects with firm _×_ product _×_ year fixed effects (equation (4)). To conserve space the results are reported in Table A.6 in the online appendix Section C.1. On the whole sample the elasticity of the exporter price to the log of the bilateral RER is positive and significant and implies that the average firm in our sample raises its price by 1.4 percent (respectively 0.9 percent) following a 10 percent depreciation of its home currency in column (1), Table 3 (resp. Table A.6). This elasticity is quantitatively close to the estimates reported in the literature on industrial and emerging countries, which typically lie between 0.05 and 0.2.<sup>25</sup> Thus, although our elasticities are estimated on a sample of developing countries, we find a degree of exchange rate pass-through which is very much consistent with those found for industrial countries. Moreover, like those found in the existing literature, our estimates also reflect limited PTM on average and very high levels of pass-through into export price (86 percent in column 1, Table 3). The estimated elasticities might be low due to measurement error arising from using annual data (Fosse, 2012). An alternative explanation is that these firm-level estimates hide a great deal of heterogeneity. If large firms adjust more to exchange rate variations at the price margin pass-through may be lower on aggregate.

Table 3: Pricing-to-market: Baseline

||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|
|---|---|---|---|---|---|---|---|---|
|Dep. var.||||ln unit|values||||
|Exporting countries|All|Excl. Mexico|EAC|MENA|Bangladesh|Chile|Mexico|All|
|ln RER|0.138<sup>_a_</sup>|0.137<sup>_a_</sup>|0.297<sup>_a_</sup>|0.050|0.091<sup>_a_</sup>|0.147<sup>_a_</sup>|0.152<sup>_a_</sup>|0.056<sup>_a_</sup>|
||(0.013)|(0.014)|(0.074)|(0.038)|(0.035)|(0.017)|(0.032)|(0.021)|
|_×_ ln(# product_t_0)||||||||0.044<sup>_a_</sup><br>(0.008)|
|ln(dest. GDP/cap)|0.064<sup>_a_</sup>|0.043<sup>_c_</sup>|-0.151<sup>_b_</sup>|0.042|0.057|0.083<sup>_b_</sup>|0.240<sup>_a_</sup>|0.068<sup>_a_</sup>|
||(0.024)|(0.026)|(0.073)|(0.045)|(0.078)|(0.034)|(0.069)|(0.024)|
|Observations|495147|349302|25666|97631|86669|139336|145845|495147|
|Adj. R<sup>2</sup>|0.979|0.975|0.960|0.975|0.928|0.980|0.984|0.979|
|Firm_×_product_×_dest. FE|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|
|Origin_×_year FE|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|

> _c_ significant at 10 percent; _b_ significant at 5 percent; _a_ significant at 1 percent. Standard errors clustered by product-origin-destination-year are in parentheses. Unit values are expressed in USD. ln RER is the real exchange rate of the destination country vis-a-vis the USD as defined in equation (2). ln(# product _t_ 0) is the total number of products exported by the firm at the beginning of the period. A product is defined at the 8 digit level. Observations perfectly predicted by the fixed effects are dropped.

A second and perhaps more surprising result is that the degree of PTM is very homogenous across origin countries. When significant, the elasticity of producer prices to the exchange rate

> 24Note that in all tables, the number of observations varies depending on the dimensions of fixed effects included, as observations perfectly predicted by the fixed effects (singletons) are dropped.

> 25Around 0.1 in France (Berman _et al._ , 2012); 0.15 in Denmark (Fosse, 2012); 0.2 in Belgium (Amiti _et al._ , 2014) and Brazil (Chatterjee _et al._ , 2013); 0.06 in China (Li _et al._ , 2015).

14