Milkshake Prices, International Reserves, and the Mexican Peso
AbstractMenu prices from 13 international restaurant franchises that operate in both El Paso, Texas and Ciudad Juarez, Mexico 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 for the exchange rate. In addition to the multi-product price ratio, the empirical analysis also incorporates interst rate parity 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 EconWPA in its series International Finance with number 0508009.
Length: 24 pages
Date of creation: 25 Aug 2005
Date of revision:
Note: Type of Document - doc; pages: 24
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Web page: http://184.108.40.206
Purchasing Power Parity; Exchange Rates; border Economies;
Other versions of this item:
- Fullerton, Thomas & Torres, David, 2005. "Milkshake Prices, International Reserves, and the Mexican Peso," MPRA Paper 434, University Library of Munich, Germany, revised 2005.
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
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