Asymmetric Exchange Rate Pass-Through in U.S. Imports of Cocoa

Both the autoregressive distributed lag (ARDL) and the nonlinear ARDL frameworks are applied to model U.S. imports of cocoa beans from Côte d'Ivoire, Ghana, and the Dominican Republic (more than 90% of U.S. cocoa imports originate from these three countries). The results provide evidence of nonlinear and asymmetric pass-through of exchange rates, regional quality difference, and imperfect competition in U.S. cocoa imports. Furthermore, a rise or fall in U.S. income leads to an increase or decrease in U.S. cocoa imports.