ABSTRACT
In this chapter the model to be utilized in the measurement of pass-through for the 258 product/country combinations will be fully explained. This explanation will include discussions of: (1) the use of a log-log model for the measurement of pass-through, (2) the use of first differencing on the variables, (3) the type of lag structure to be utilized in the measurement process, (4) the number of lags of the exchange rate variable that will be used, (5) the assumptions that are being made when using the measurement model, (6) what the actual measurement of pass-through will consist of, and (7) the exclusion of explanatory variables other than the exchange rate variable and its lags from the pass-through measurement model.
