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Exchange Rates and Prices
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TL;DR: In this article, the adjustment of relative prices to exchange rate movements is explained in an industrial organization approach, where the extent of absolute and relative price adjustment is shown to depend on market integration, product substitutability, relative number of domestic and foreign firms, and the market structure.
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Abstract: The adjustment of relative prices to exchange rate movements is explained in an industrial organization approach. Given labor costs in the respective currencies, exchange rate movements change costs for firms selling in the home market and thus disturb the industry equilibrium. The extent of absolute and relative price adjustment is shown to depend on market integration, product substitutability, the relative number of domestic and foreign firms, and the market structure. The impact of exchange rates on prices is illustrated in a variety of approaches including the Cournot, A. Dixit and J. Stiglitz_(1977), and S. Salop_(1979) models. Some empirical evidence is offered in support of the theory. Copyright 1987 by American Economic Association.
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Citations
Exchange rates and prices of Australian manufactured exports
TL;DR: Wechselkurse and Preise in the 80er-1990s: In as mentioned in this paper, the Durchlauf-Koeffizienten fur the Industrieguterexporte Australiens were geschatzt, and zwar disaggregiert nach den Bereichen der zweistelligen ASIC.
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Pricing-to-Market and Market Structure*
TL;DR: In this article, the link between exchange rates and traded good prices was investigated by estimating pricing-to-market equations for the five main euro area countries over the period 1990-99.
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Exchange Rate Pass-Through, Currency of Invoicing and Market Share
TL;DR: This article analyzed l'effet de la structure de marche sur le choix du degre de transmission des variations du taux de change and la monnaie de facturation retenue dans les echanges internationaux.
The Optimal Currency Composition of External Debt: Theory and Applications to Mexico and Brazil
TL;DR: In this paper, the authors used a utility-maximizing framework to find the optimal currency composition of external debt to minimize exposures to external price risk in Mexico and Brazil, and showed that the low correlations between the costs of borrowings and export and import prices make currency composition a very imperfect hedging tool.
Pricing to Market and the Real Exchange Rate
Hamid Faruqee
- 01 Dec 1995
TL;DR: In this paper, the consequences of pricing to market for exchange rate pass-through and real exchange rate dynamics across different patterns of trade are investigated, and pricing-to-market behavior intensifies the degree of persistence in real exchange rates under nominal rigidities, and allows monetary shocks to have permanent effects on relative prices so long as goods markets remain segmented.
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