IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Dispersion in Real Exchange Rates

  • Mario J. Crucini

    ()

    (Department of Economics, Vanderbilt University)

  • Chris I. Telmer

    ()

    (Graduate School of Industrial Administration, Carnegie Mellon University)

  • Marios Zachariadis

    ()

    (Department of Economics, Ohio State University)

Using cross-sectional data on local currency prices of over 1,800 retail goods and services across 13 European countries in the mid 1980's, we characterize the behavior of average relative prices -- `real exchange rates' -- as well as dispersion around these averages. We find that the averages are surprisingly close to what purchasing power parity would suggest. In other words, in the mid 1980's, averages of ratios of foreign to domestic prices (across goods for a particular pair of countries) provide surprisingly accurate predictions of most nominal cross-rates. Variation around the averages, however, is large but is found to be related to economically meaningful characteristics of goods such as measures of international tradeability, the importance of non-traded inputs into production and the geographical distance between product markets. Using data on product brands, we find that product heterogeneity is at least as important as geography in explaining relative price dispersion.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.accessecon.com/pubs/VUECON/vu00-w13.pdf
File Function: Revised version, 2000
Download Restriction: no

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0013.

as
in new window

Length:
Date of creation: May 2000
Date of revision:
Handle: RePEc:van:wpaper:0013
Contact details of provider: Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:van:wpaper:0013. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.