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Export Prices and Exchange Rates


  • Irving B. Kravis
  • Robert E. Lipsey
  • Eliot R. J. Kalter


The present paper is intended to make a modest contribution to an under-standing of one small but important link in this complicated chain of interacting factors. It is a link that has often been ignored because strong simplifying assumptions have until very recently usually been made about it. We refer to the relation of exchange rate changes, export prices, and domestic prices. During the last few years a number of attempts have been made to examine the extent to which exchange rate changes were "passed through"; that is, the extent to which a given depreciation in the U.S. dollar, for example, resulted in a corresponding decline in the price of U.S. exports in foreign currencies. However, the possibility that a change in the exchange rate might also alter the relationship between the export price and the domestic price of a given product, expressed in the same currency, has been almost completely ignored. The assumption made, implicitly by most past writers in the theory of international trade and more recently explicitly by advocates of the monetary approach to the balance of payments, has been that the "law of one price" applies to shipments destined for home markets and for foreign markets.

Suggested Citation

  • Irving B. Kravis & Robert E. Lipsey & Eliot R. J. Kalter, 1977. "Export Prices and Exchange Rates," NBER Working Papers 0182, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0182
    Note: ME

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    Cited by:

    1. Alessio Emanuele BIONDO, 2010. "The Law of One Price: Survey of a Failure," Theoretical and Practical Research in Economic Fields, ASERS Publishing, vol. 0(2), pages 168-182, December.
    2. Jacques R. Artus & John H. Young, 1979. "Fixed and Flexible Rates: A Renewal of The Debate," NBER Working Papers 0367, National Bureau of Economic Research, Inc.
    3. repec:lrc:lareco:v:5:y:2017:i:5:p:1-11 is not listed on IDEAS
    4. Giovanni Arese-Visconti, 2002. "Labor-Cost Effects on Relative Prices between Regions of a Monetary Union: Implications for the EMU," Econometrics Working Papers Archive wp2002_20, Universita' degli Studi di Firenze, Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti".
    5. Benkovskis, Konstantins, 2005. "Econometric analysis and forecasting of Latvia's balance of payments," MPRA Paper 23274, University Library of Munich, Germany.

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