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International Prices and Exchange Rates

In: Handbook of International Economics

Author

Listed:
  • Burstein, Ariel
  • Gopinath, Gita

Abstract

We survey the recent empirical and theoretical developments in the literature on the relation between prices and exchange rates. After updating some of the major findings in the empirical literature, we present a simple framework to interpret this evidence. We review theoretical models that generate insensitivity of prices to exchange rate changes through variable markups, both under flexible prices and nominal rigidities, first in partial equilibrium and then in general equilibrium.

Suggested Citation

  • Burstein, Ariel & Gopinath, Gita, 2014. "International Prices and Exchange Rates," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 391-451, Elsevier.
    • Handle: RePEc:eee:intchp:4-391
    DOI: 10.1016/B978-0-444-54314-1.00007-0
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    More about this item

    Keywords

    Real exchange rate; Nominal exchange rate; Border prices; Variable markups; Price rigidity; Pass-through; Tradeable goods;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F15 - International Economics - - Trade - - - Economic Integration

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