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International Prices and Exchange Rates

  • Ariel Burstein
  • Gita Gopinath
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    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.

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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18829.

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    Date of creation: Feb 2013
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    Handle: RePEc:nbr:nberwo:18829
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