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Exporter's price-setting behaviour and currency invoicing play a key role in the literature on the new open-economy macroeconomics. This paper estimates exchange rate pass-through coefficients for the exports of four ASEAN countries: Indonesia, Malaysia, the Philippines and Thailand. In addition, previous estimates of pass-through as well as invoicing behaviour in East Asia are discussed in the context of regional integration. The new pass-through coefficients are estimated under two alternate specifications for up to 34 goods for each of the four ASEAN countries destined for up to 13 major markets. The results suggest: (a) little pass-through is occurring in Southeast Asia and (b) this lack of pass-through is more likely attributable to the fact that they are small countries in a relatively integrated market, rather than evidence of pricing to market. The implications for regional monetary integration of this apparently low degree of pass-through are detailed. Copyright 2006 The Authors Journal compilation Blackwell Publishing Ltd. 2006 .

Recently, the issue of a decline in exchange rate pass-through has gained much more attention. Taylor conjectures that a worldwide decline in exchange rate pass-through is related to the low and stable inflation in many industrialized countries since the early 1990s. Developments of 'new open-economy macroeconomics' also cast renewed attention on exchange rate pass-through. Theoretical research shows that the choice of an optimal exchange rate regime and the transmission of monetary policy impacts depend crucially on the exporter's price setting behaviour. There are many studies on the pass-through of Japanese exports, yet most studies simply use the industry-breakdown data on export price indices, which is insufficient to assess pass-through patterns in regional trade. Significantly, highly disaggregated (HS 9-digit level) commodity data are used here to evaluate the extent of pass-through by commodity and by destination. We investigate and compare the extent of pass-through to East Asia, Europe, and the US. We also examine whether there is any difference in the degree of pass-through in the pre-and post-Asian crisis era. Results suggest the most pricing-to-market (PTM) occurs in exports to the US market followed by significant, but less PTM in Europe. Virtually no PTM is found in Japanese exports to East Asia. Also, there is no clear evidence of either increasing or decreasing pass-through over time.

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