Matthieu Crozet gave a presentation at the JMA conference organised in Rennes this June. He presented a paper, written jointly with Federal Trionfetti and Julian Hinz, titled « Exchange rate pass-around in the eurozone » .
An unexpected change in the Swiss National Bank’s policy induced an abrupt change in the Swiss Franc / Euro exchange rate in January 2015. We document that French firms serving the Swiss market exhibited a heterogeneous response to the dramatic shock. Those firms invoicing their shipments in Euros reacted less than those invoicing in Swiss Francs. Furthermore, and strikingly, we also observe a sudden change in export prices to the Eurozone of those exposed firms serving the Swiss market with Euro-invoiced goods — an “exchange rate pass-around” effect. We set up a simple model that rationalizes the partial and heterogeneous price responses by firms. We then test the main predictions of the model empirically using detailed French firm-level customs data.