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Price of recreational products and the exchange rate: an empirical investigation on US data

  • Cellini, Roberto
  • Paolino, Alessandro

The paper analyses the cointegration relationships and the causal links between the exchange rate of the US Dollar, on the one side, and different price indices of US products on the other side. Data are of monthly frequency and cover a period of two or three decades. We show that the exchange rate cointegrate with the Consumer Price Index and with the prices indices of several agricultural, manufactured and service goods; moreover a one-direction causal link is present, running from price to exchange rate. On the opposite, cointegrating relationships between exchange rate and price indices do not exist in the case of recreational products with “cultural” content. Tentative theoretical explanations are proposed.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 5194.

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Date of creation: Oct 2007
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Handle: RePEc:pra:mprapa:5194
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  11. Charles Engel & John H. Rogers, 1999. "Deviations from Purchasing Power Parity:Causes and Welfare Costs," Discussion Papers in Economics at the University of Washington 0038, Department of Economics at the University of Washington.
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