Abstract
We provide insights into the extent of rigidities and the exchange rate pass-through (ERPT) of wholesale food prices at the regional level in a small open emerging economy. Notably, we utilize a novel and extensive micro-database of wholesale prices in markets within the principal and intermediate Colombian cities. The granularity of the data provides the advantage of assessing whether temporal and spatial aggregation procedures conceal transmission channels from the exchange rate to wholesale agricultural prices. Our initial exploratory analysis of wholesale pricing characteristics suggests that the Colombian food sector demonstrates moderate price rigidity, with fewer price asymmetries in response to positive and negative exchange rate fluctuations. Furthermore, cross-section results indicate a lifelong ERPT of 27% in our preferred model specification. Moreover, outcomes from a non-linear autoregressive distributed lag (NARDL) analysis show cointegration between the exchange rate and wholesale prices in 81% of the cases, complete exchange rate pass-through (with notable heterogeneity across products), and less prevalence of price asymmetries.
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