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Export pricing and the cross-country correlation of stock prices

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  • Tervala, Juha

Abstract

This study analyses cross-country correlations of stock prices (values of firms) using the basic New Open Economy Macroeconomics model. We show that cross-country correlations of stock prices greatly depend on the currency of export pricing in the case of monetary shocks but not notably for temporary technology shocks. In the case of a money supply shock, the producer (local) currency pricing version of the model generates a negative (positive) cross-country correlation of stock prices.

Suggested Citation

  • Tervala, Juha, 2009. "Export pricing and the cross-country correlation of stock prices," Bank of Finland Research Discussion Papers 28/2009, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:rdp2009_028
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