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Exchange Rates and Prices: Evidence from the 2015 Swiss Franc Appreciation


  • Ariel Burstein



The removal of the lower bound on the CHF/EUR nominal exchange rate in January 2015 provides a unique setting to study the implications of a large and sudden appreciation of the nominal exchange rate in an otherwise stable macroeconomic environment. Using retail prices from a homescan data of individual consumer goods and the microdata underlying the import price index, we measure the response of border and consumer prices to the CHF appreciation, and how household expenditures responded to these price changes. Cross-section variation in border price changes induced by differences in the currency of invoicing at the border have a significant impact on consumer prices and expenditures of imported goods at the consumer level, and also on consumer prices of domestically produced goods that compete with these imported good. While the frequency of import price reductions rises in the aftermath of the appreciation, the average size of these price reductions falls (which is consistent with a s-S pricing model with fat-tailed distributed shocks), contributing to low aggregate import-price pass-through.

Suggested Citation

  • Ariel Burstein, 2018. "Exchange Rates and Prices: Evidence from the 2015 Swiss Franc Appreciation," 2018 Meeting Papers 658, Society for Economic Dynamics.
  • Handle: RePEc:red:sed018:658

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    Cited by:

    1. Holger Breinlich & Elsa Leromain & Dennis Novy & Thomas Sampson, 2019. "Exchange Rates and Consumer Prices: Evidence from Brexit," CESifo Working Paper Series 8001, CESifo.
    2. Xavier Jaravel & Erick Sager, 2019. "What are the price effects of trade? Evidence from the US and implications for quantitative trade models," CEP Discussion Papers dp1642, Centre for Economic Performance, LSE.
    3. Chen, Natalie & Chung, Wanyu & Novy, Dennis, 2018. "Vehicle Currency Pricing and Exchange Rate Pass-Through," CEPR Discussion Papers 13085, C.E.P.R. Discussion Papers.
    4. Costa, Rui & Dhingra, Swati & Machin, Stephen, 2019. "Trade and Worker Deskilling," CEPR Discussion Papers 13768, C.E.P.R. Discussion Papers.
    5. Santiago E. Alvarez & Sarah M. Lein, 2020. "Tracking inflation on a daily basis," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 156(1), pages 1-13, December.
    6. Fischer, Andreas M & Yesin, Pinar, 2019. "Foreign currency loan conversions and currency mismatches," CEPR Discussion Papers 13923, C.E.P.R. Discussion Papers.
    7. Konstantin Egorov & Dmitry Mukhin, 2020. "Optimal Policy under Dollar Pricing," Working Papers w0261, New Economic School (NES).
    8. Fernandes, Ana & Winters, L. Alan, 2018. "The effect of exchange rate shocks on firm-level exports: evidence from the Brexit vote," CEPR Discussion Papers 13253, C.E.P.R. Discussion Papers.
    9. Jaravel, Xavier & Sager, Erick, 2019. "What are the price effects of trade? Evidence from the US for quantitative trade models," LSE Research Online Documents on Economics 103402, London School of Economics and Political Science, LSE Library.

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