Heterogeneity in exchange rate pass-through to import prices in Thailand: Evidence from micro data

We use transaction-level customs data and show that there is significant the Thai border. Our findings uncover several structural determinants of ERPT, where we document lower ERPT for (i) prices of differentiated goods, (ii) firms with a higher degree of market power, (iii) prices of goods controlled by the government and (iv) goods invoiced in the local currency. We also find that for the large majority of Thai imports that are invoiced in the US dollar under the dominant currency pricing (DCP) paradigm, price responses to the US dollar are much stronger than those associated with the bilateral exchange rate vis-à-vis the exporters' currency, but only in the short run. Finally, by investigating state-dependent properties of ERPT, we find that small exchange rate changes are associated with higher ERPT, while the degree of pass-through is stronger during episodes of depreciations rather than appreciations, particularly for goods that practice DCP.