Revisiting Perverse Effects on Exchange Rate Pass-Through
AbstractThe effects of a change in the exchange rate on product prices are investigated using a static international duopoly model without product differentiation. A general condition is derived for perverse exchange rate pass-through assuming decreasing marginal costs for firms in two trading countries. The result is clarified on the basis of a new diagram for determining equilibrium supplies in the two countries.
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Bibliographic InfoArticle provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.
Volume (Year): 4 (2005)
Issue (Month): 1 (April)
exchange rate pass-through; international duopoly; decreasing marginal cost;
Find related papers by JEL classification:
- F1 - International Economics - - Trade
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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"Market share and exchange rate pass-through in world automobile trade,"
International Finance Discussion Papers
446, Board of Governors of the Federal Reserve System (U.S.).
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- Robert C. Feenstra & Joseph E. Gagnon & Michael M. Knetter, 1993. "Market Share and Exchange Rate Pass-Through in World Automobile Trade," NBER Working Papers 4399, National Bureau of Economic Research, Inc.
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