Input costs’ pass-through to output prices: a cross-country empirical analysis

Abstract

ABSTRACT This article decodes the pass-through behaviour from input prices to output prices, which is a key component in assessing second-order effects of cost-push pressures. Using panel GMM model, this paper has tried to empirically test the degree of pass-through of Purchasing Managers Index (PMI) input prices to output prices in a cross-country framework for 28 countries for the period 2011–2023. Empirical results support modest pass through with the sensitivity of output prices to input prices being lower for advanced nations and inflation targeting countries and higher for manufacturing sector with signs of non-linearity.