Open AccessPosted Content
Exchange Rates and Prices
837
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.
read more
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.
read more
Chat with Paper
AI Agents for this Paper
Find similar papers on Google Scholar, PubMed and Arxiv
Write a critical review of this paper
Analyze citations of this paper to find unaddressed research gaps
Citations
The Exchange Rate Pass-Through in the New EU Member States ∗
TL;DR: In this article, the exchange rate pass-through to import, producer and consumer prices for ten Central and Eastern European countries with quarterly data from January 1996 to December 2011 is investigated, both in the short and long run.
30
The Contractionary Short‐Run Effects of Nominal Devaluation in Developing Countries: Some Neglected Nuances
TL;DR: In this paper, the authors extended the model developed by Krugman and Taylor (1978) to take into account interesting features of the evolving structure of global trade, such as the growing presence of transnational production chains and differential pricing behavior of exports destined for industrial and developing countries.
Essays on exchange rates, prices and interest rates
Annika Alexius
- 01 Jan 1997
TL;DR: In this paper, consistent solutions to the Flood and Isard (1990) escape clause model are derived in the spirit of Lohmann (1990), where simple inflation targets may be supplemented with an escape clause to be evoked in case the economy is hit by a major supply shock.
An I(2) Cointegration Analysis of Price and Quantity Formation in Danish Manufactured Exports
TL;DR: In this paper, the long-run and short-run structure of the Danish manufacturing export sector is analyzed within a cointegrated vector autoregressive model, where the price variables of the analysis can be characterized as integrated of second order, I(2).
Exchange rates, cross-border travel, and retailers: Theory and empirics
TL;DR: In this article, the authors provide a theoretical and empirical analysis of the effects of nominal exchange rate movements on retail firms' sales, emphasizing the role of cross-border travel by consumers.
30