A Dynamic analysis of Finnish export prices

In this paper the degree of dependency of Finnish export prices on the exchange rate, competitors' prices and domestic costs is investigated. A distinction is made between heterogeneous and homogeneous output. A dynamic model selection procedure, especially in the form of an error correction mechanism, is utilized in both aggregated and disaggregated frameworks. The conclusion is that changes in exchange rates and in competitors' prices are transmitted to Finnish export prices fairly quickly and virtually in full, while the effects of domestic costs are relatively modest.