Milkshake Prices, International Reserves, and the Mexican Peso
AbstractMenu prices from 13 international restaurant franchises that operate in both El Paso and Ciudad Juarez are utilized to examine the behavior over time of the peso/dollar exchange rate. Parametric and non-parametric tests indicate that the price ratio alone provides a biased estimator of the exchange rate. In addition to the multi-product price ratio, the empirical analysis also incorporates interst rate prity and balance of payment variables. The combination of unique microeconomic sample data with national macroeconomic variables illustrates one manner in which border economies provide information regarding the interplay of financial markets between Mexico and the United States.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 434.
Date of creation: 2005
Date of revision: 2005
Publication status: Published in Frontera Norte 33.17(2006): pp. 53-76
Prices; exchange rates; border economics;
Other versions of this item:
- Thomas M Fullerton Jr & David Torres, 2005. "Milkshake Prices, International Reserves, and the Mexican Peso," International Finance 0508009, EconWPA.
- R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
- F31 - International Economics - - International Finance - - - Foreign Exchange
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-12 (All new papers)
- NEP-CBA-2006-11-12 (Central Banking)
- NEP-MON-2006-11-12 (Monetary Economics)
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