This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Cost Pass Through in a Competitive Model of Pricing-to-Market

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Auer, Raphael () (Swiss National Bank)
Chaney, Thomas () (Department of Economics University of Chicago)

Additional information is available for the following registered author(s):

Abstract

This paper builds up an extension to the Mussa and Rosen (1978) model of quality pricing under perfect competition. Our model incorporates decreasing returns to scale. First, we predict that exchange rate shocks are imperfectly passed through into prices. Second, prices of low quality goods are more sensitive to exchange rate shocks than prices of high quality goods. Third, in response to an exchange rate appreciation, the composition of exports shifts towards higher quality and more expensive goods. We test those predictions using highly disaggregated price and quantity US import data. We find that the prices of high quality goods, proxied as high unit price goods, are more sensitive to exchange rate movements. Moreover, we find evidence that in response to an exchange rate appreciation, the composition of exports shifts towards high unit price goods.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.snb.ch/n/mmr/reference/working_paper_2008_06/source/working_paper_2008_06.n.pdf
File Format: text/plain
File Function: Full text
Download Restriction: no

Publisher Info
Paper provided by Swiss National Bank in its series Working Papers with number 2008-6.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 42 pages
Date of creation: 15 May 2008
Date of revision:
Handle: RePEc:ris:snbwpa:2008_006

Contact details of provider:
Postal: B�rsenstrasse 15, P. O. Box, CH - 8022 Z�rich
Phone: +41 44 631 31 11
Fax: +41 44 631 39 11
Email:
Web page: http://www.snb.ch/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Enzo Rossi).

Related research
Keywords: Pricing-to-Market; Exchange Rate Pass Through; Local Distribution;

Find related papers by JEL classification:
F11 - International Economics - - Trade - - - Neoclassical Models of Trade
F31 - International Economics - - International Finance - - - Foreign Exchange
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

This paper has been announced in the following NEP Reports:

Statistics
Access and download statistics

Did you know? RePEc also has a blog.

This page was last updated on 2009-11-4.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.