The real exchange rate and US manufacturing profits: a theoretical framework with some empirical support
AbstractThis paper studies the relationship between the real exchange rate and manufacturing profits using Marston's model of pricing-to-market. Looking at US data, we find that a sustained real depreciation of the dollar has a significant and substantial influence on manufacturing profits. During the early 1980s, the appreciation of the dollar reduced profits by at least 25% conditional on the realized time path of sales, costs, and the US markup. The post-plaza depreciation of the dollar boosted profits at least 30%. Copyright @ 1997 by John Wiley & Sons, Ltd. All rights reserved.
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Bibliographic InfoPaper provided by Federal Reserve Bank of New York in its series Research Paper with number 9214.
Date of creation: 1992
Date of revision:
Other versions of this item:
- Clarida, Richard H, 1997. "The Real Exchange Rate and US Manufacturing Profits: A Theoretical Framework with Some Empirical Support," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 2(3), pages 177-87, July.
- Clarida, R.H., 1992. "The real Exchange Rate and U.S. Manufacturing Profit : A Theoretical Framework with Some Empirical Support," Discussion Papers 1992_28, Columbia University, Department of Economics.
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