Exchange rate pass-through inflation and wage differentials in late-industrializing economies: the Mexican case
Abstract
This paper investigates exchange rate pass-through inflation, and the wage bargaining process, in a developing economy in which firms’ market power is largely dependent on technical progress embodied in imported intermediates and capital goods. It develops a heterodox model of income distribution, based on theoretical contributions from Latin American structuralists, labor market segmentationists and post-Keynesian writers, and it presents supportive empirical evidence from the Mexican economy.
JEL Classification: E11; E12; E31; J31; O11.
Keywords: income distribution inflation developing economies