putting the new open economy macroeconomics to a test abstract this paper explores one way to extend the new open economy macroeconomics in an empirical direction adapting maximum likelihood procedures it estimates and tests an intertemporal small open economy model with monetary shocks and nominal rigidities results offer mixed support for a benchmark model where prices are assumed to be sticky in the currency of the buyer price stickiness seems to be an important element as overall results are poorer for versions of the model in which prices either are flexible or are sticky in the currency of the producer the benchmark model does a better job explaining some variables than others in particular it does a poor job explaining exchange rate movements

nominal income targeting in an open economy optimizing model abstract this paper presents simulation results regarding the performance of nominal income targeting a monetary policy rule that sets interest rates in response to deviations of nominal gdp growth from a target path the macroeconomic model is one in which agents solve dynamic optimization problems with rational expectations but in an environment with slow price adjustments in the present version consumption choices reflect habit formation and the economy is open to international flows of goods and securities when calibrated to quarterly us data the model s results suggest that nominal income targeting performs well in relation to inflation targeting and taylor rules

an overlapping generations model for monetary policy analysis abstract we integrate an overlapping generations structure into the standard lagos and wright 2005 framework and show that mild inflation can be welfare improving the reason behind this result is that inflation induces young agents to reduce their savings and to increase their consumption which overpowers the utility loss of old agents however the beneficial effect disappears for higher inflation rates such that the optimal inflation rate is one at an intermediate level

the exchange rate pass through to import and export prices the role of nominal rigidities and currency choice abstract using both regression and var based estimates the paper finds that the exchange rate pass through to import prices for a large number of countries is incomplete and larger than the pass through to export prices previous studies have reported similar results which give rise to the puzzle that while local currency pricing is needed to account for incomplete import price pass through it would not imply a lower export price pass through recent explanations of this puzzle have emphasized markup adjustment in response to exchange rate changes this paper suggests an alternative explanation based on the presence of both producer and local currency pricing using a dynamic general equilibrium model the paper shows that a mix of producer and local currency pricing can explain the pass through evidence even with a constant markup the model can also explain the observed variability of key variables as well as the fact that the regression and var estimates tend to be similar

general equilibrium with nonconvexities and money in a general equilibrium economy with nonconvexities there are sunspot equilibria with good welfare properties sunspots can ameliorate the effects of the nonconvexities for these economies we show that agents act as if they have quasi linear utility functions we use this result to construct a new model of monetary exchange along the lines of lagos and wright where trade occurs in both centralized and decentralized markets but instead of quasi linear preferences we assume general preferences but with indivisible labor this suggests that modern monetary theory is more robust than one might have thought it also constitutes progress on the classic problem of integrating monetary economics and general equilibrium theory

exchange rate pass through exchange rate volatility and exchange rate disconnect abstract this paper explores the hypothesis that high volatility of real and nominal exchange rates may be due to the fact that local currency pricing eliminates the pass through from changes in exchange rates to consumer prices exchange rates may be highly volatile because in a sense they have little effect on macroeconomic variables the paper shows the ingredients necessary to construct such an explanation for exchange rate volatility in addition to the presence of local currency pricing we need a incomplete international financial markets b a structure of international pricing and product distribution such that wealth effects of exchange rate changes are minimized and c stochastic deviations from uncovered interest rate parity together it is shown that these elements can produce exchange rate volatility that is much higher than shocks to economic fundamentals and disconnected from the rest of the economy in the sense that the volatility of all other macroeconomic aggregates are of the same order as that of fundamentals

trade liberalization and rising wage inequality in latin america reconciliation with hos theory abstract the paper puts forward the hypothesis that the transitory effects of trade liberalization on wage inequality can differ from the long run outcome in cases where the hos theory predicts a decline in wage inequality in the long run a temporary rise can nevertheless occur due to i the asymmetries in the speed of contraction in the import sector and expansion in other sectors and ii the capital skill complementarity in production the asymmetric contraction and expansion causes a transitory capital accumulation that boosts the relative and the real wage of skilled labor due to capital skill complementarity although the long run hos fundamentals are therefore dominated in the short run by the transient effects arising due to capital skill complementarity the observed rise in wage inequality is nonetheless consistent with the hos theory appropriately extended to a dynamic setting

barter and monetary exchange under private information the authors develop a model of production and exchange with uncertainty concerning the quality of commodities and study the role of fiat money in ameliorating frictions caused by private information the model is specified so that without private information only high quality commodities are produced and there is no welfare gain from using money with private information there can be equilibria and sometimes multiple equilibria where low quality commodities are produced and money can increase welfare money works by promoting useful production and exchange in efficient monetary equilibria agents adopt strategies that increase the probability of acquiring high quality output copyright 1994 by american economic association

openness imperfect exchange rate pass through and monetary policy abstract this paper analyses the implications of imperfect exchange rate pass through for optimal monetary policy in a linearised open economy dynamic general equilibrium model calibrated to euro area data imperfect exchange rate pass through is modelled by assuming sticky import price behaviour the degree of domestic and import price stickiness is estimated by reproducing the empirical identified impulse response of a monetary policy and exchange rate shock conditional on the response of output net trade and the exchange rate it is shown that a central bank that wants to minimise the resource costs of staggered price setting will aim at minimising a weighted average of domestic and import price inflation

exchange rate pass through in turkish export and import prices this article examines exchange rate pass through into prices of internationally traded goods in the case of a small emerging open market economy such as turkey in this study we provide empirical evidence on complete pass through in export prices in turkey using aggregate data on the manufacturing sector our data do not however support complete pass through in import prices in turkey this contradicts with the findings of the existent literature which typically concludes that the degree of pass through in import prices is higher than the one of export prices this can be interpreted as a result of competition between import and import substituting industries where importers fall short of competing successfully with import substituting sectors although turkish importers can be responsive to exchange rate changes to a certain degree in the short run in the long run they seem to lose their market power perhaps as a result of swift competition a complete exchange rate pass through to export prices in t

new directions for stochastic open economy models the paper develops a simple stochastic new open economy macroeconomic model based on sticky nominal wages explicit solution of the wage setting problem under uncertainty allows one to analyze the effects of the monetary regime on welfare expected output and the expected terms of trade despite the potential interplay between imperfections due to sticky wages and monopoly the optimal monetary policy rule has a closed form solution to motivate our model we show that observed correlations between terms of trade and exchange rates are more consistent with our traditional assumptions about nominal rigidities than with a popular alternative based on local currency pricing 2000 elsevier science b v all rights reserved

exchange rate and inflation dynamics in dollarized economies abstract we use a panel of a hundred plus countries with differing degrees of dollarization to perform an empirical analysis of the effects on inflation of exchange rate depreciations the results qualify the common view that countries with higher dollarization exhibit higher inflation pass through we show that large depreciations tend to generate a negative impact on the pass through coefficient this impact being more intense the higher the level of dollarization of the economy we interpret this as evidence that in highly dollarized economies the classic inflationary effects of a real depreciation higher internal demand and imported inflation can be offset or diminished by both the larger financial costs and the balance sheet effect especially if the depreciation is large additionally the exchange rate regime is shown to matter countries with fixed exchange rates suffer more noticeably the balance sheet effects of large depreciations

money and asset prices with uninsurable risks abstract we present a theory of differences of liquidity across assets based on an endogenous ranking of assets as media of exchange arising from their relative quality as hedging devices when assets have two distinct roles as intertemporal media of exchange and hedging devices buyers have generically a strict preference for paying sellers with the asset which is the relative better hedging device for sellers the consequence of this preference is that there are three monetary policy regimes and these regimes differ in which assets serve as media of exchange whether assets carry a liquidity premium and in the impact that monetary policy has on asset prices

exchange rate pass through and inflation a nonlinear time series analysis abstract this paper investigates the relationship between the exchange rate pass through erpt and inflation by estimating a nonlinear time series model based on a simple theoretical model of erpt determination we show that the dynamics of erpt can be well approximated by a class of smooth transition autoregressive star models using the past inflation rate as a transition variable we employ several u shaped transition functions in the estimation of the time varying erpt to us domestic prices the estimation result suggests that declines in the erpt during the 1980s and 1990s are associated with lowered inflation

exchange rate pass through at the product level we use a detailed database to investigate exchange rate pass through at the product level for a large number of countries the empirical analysis suggests that pricing behaviours are dichotomous with complete pass through in around 25 of sectors and significant pricing to market in the remaining ones average long run pass through coef ficient is close to 80 this result hides a strong heterogeneity of pass through behaviours across sectors even when composition effects are controlled for average pass through varies across importing countries the econometric analysis shows that pass through tends to be higher in volatile environments in less developed countries in weakly integrated markets jel classification f12 f31 f41

a model in which monetary policy is about money abstract optimal monetary policy is studied in a model with i heterogeneity in the degree to which different people are monitored have publicly known histories ii idiosyncratic shocks that give rise to heterogeneity in earning and spending realizations and iii central bank intervention in a market in claims or credit in which the participants are those who are heavily monitored a special case of the model has everyone perfectly monitored in that case there is no role for money and no role for central bank intervention in the example displayed with imperfect monitoring optimal intervention is not simple

money bargaining and risk sharing we investigate the dual role of money as a self insurance device and a means of payment when perfect risk sharing is not possible and when the two roles of money are disentangled we use a variant of lagos wright 2005 where agents face a risk in the centralized market cm in the decentralized market dm money s main role is as a means of payment while in the cm it is as a self insurance device we show that state contingent inflation rates can improve agents ability to self insure in the cm thereby improving the terms of trade in the dm we then characterize the optimal monetary policy

monetary transmission mechanism in central and eastern europe surveying the surveyable this paper surveys recent advances in empirical studies of the monetary transmission mechanism mtm with special attention to central and eastern europe cee our results indicate that the strength of the exchange rate pass through substantially declined over time mainly due to a fall in inflation rates and to some extent due to the so called composition effect the asset price channel is weak and is likely to remain weak because of shallow stock and private bond markets and because of low stock and bond holdings of domestic household house prices may become an exception with higher levels mortgage lending and with high owner occupancy ratios while the credit channel could be a powerful channel of monetary transmission as new funds raised on capital markets are close to zero in cee it is actually not as both commercial banks and non financial corporations can escape domestic monetary conditions by borrowing from their foreign mother companies the moderately good news is however that those banks and firms are influenced by monetary policy in the euro area because their parent institutions are themselves subjected to the credit channel in the euro area

fiat money in a pairwise trading multi good overlapping generations model abstract this paper studies a stationary pure exchange overlapping generations model with a particular kind of randomly generated pairwise trading pattern this model in contrast to the usual overlapping generations models has the following implications as regards existence it is shown that a standard boundary condition on preferences is sufficient to imply the existence of a stationary monetary equilbrium as regards properties of the equilibrium for some specifications my model has a stationary equilibrium in which claims bear a higher rate of return than fiat money it is also proved that this stationary equilibrium is conditionally pareto optimal

inflation tax rules and investment some econometric evidence this paper presents econometric evidence on the effect of tax incentives on business investment in the united states in the period from 1953 through1978 the analysis emphasizes that the interaction of inflation and existing tax rules has contributed substantially to the decline of business investment since the late 1960 s because the investment process is far too complex for any simple econometric model to be convincing i have estimated three quite different models of investment behavior the strength of the empirical evidence rests on the fact that all three specifications support the same conclusion more generally the analysis and evidence show that theoretical models of macroeconomic equilibrium should specify explicitly the role of distortionary taxes especially taxes on capital income the failure to include such tax rules can have dramatic and misleading effects on the qualitative as well as the quantitative properties of macroeconomic theories this paper was presented as the fisher shultz lecture at the fourth world congress of the econometric society 29 august 1980 in aix en province this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this abstract was borrowed from another version of this item

optimal monetary growth abstract in the absence of monetary superneutrality inflation affects capital accumulation and the demand for real balances this paper derives the combination of monetary and lump sum fiscal policy which maximizes the sum of discounted utilities of representative consumers in present and future generations under the optimal policy package the steady state has a zero nominal interest rate and has monetary contraction at the rate of intergenerational discount as the rate of intergenerational discount rate approaches zero optimal policy maximizes steady state utility of the representative consumer in this case the optimal steady state is characterized by a constant nominal money supply

the exchange rate in a dynamic optimizing business cycle model with nominal rigidities a quantitative investigation this paper studies a quantitative dynamic optimizing business cycle model of a small open economy with staggered price and wage setting the model exhibits exchange rate overshooting in response to money supply shocks the predicted variability of the nominal and especially of the real exchange rate is noticeably higher than in standard real business cycle models with flexible prices and wages a positive domestic money supply shock is predicted to lower the domestic interest rate raise gdp and trigger a depreciation of both the nominal and real exchange rate increases in domestic productivity and in the world interest rate are also predicted to induce a nominal and real exchange rate depreciation 2001 elsevier science b v all rights reserved

identifying sources of macroeconomic and exchange rate fluctuations in the uk abstract using quarterly data for the period 1985 1 2011 1 this paper uses a stylised open economy structural var model to identify the types of shocks responsible for macroeconomic fluctuations in the uk economy the stylised model implies a set of short run restrictions that allow for the identification of the shocks the importance of each shock is determined by examining forecast error variance decompositions impulse response functions and implied long run or permanent effects the results presented here imply that two shocks called the technology and is shocks are relatively more important than other shocks monetary shocks do exhibit long run monetary neutrality but clearly monetary policy is not responsible for a meaningful share of output and employment fluctuations during the sample period the estimated var and structural disturbances imply that the model accurately reflects the uk economy there is little evidence of a price puzzle or an exchange rate puzzle evidence against uncovered interest rate parity in response to an unexpected monetary policy tightening

border prices and retail prices abstract we analyze retail prices and at the dock import prices of specific items in the bureau of labor statistics bls cpi and ipp databases using both databases simultaneously to identify items that are identical in description at the dock and when sold at retail this identification allows us to measure the distribution wedge associated with bringing traded goods from the point of entry into the united states to their retail outlet we find that overall u s distribution wedges are 50 70 around 10 to 20 percentage points higher than that reported in the literature we discuss the implications of this for measuring the size of the pure tradeables sector exchange rate pass through and real exchange rate determination we find that distribution wedges are very stable over time but there is considerable variation across items there is some variation across the country of origin for the imported item for our major trading partners but not as much as the cross item variation we also investigate the determinants of distribution wedges finding that wedges do not vary systematically with exchange rates but are related to other features of the micro data

deep habits and exchange rate pass through abstract habit persistence at the level of individual goods varieties can explain incomplete exchange rate pass through to international prices deep habits give rise to a dynamic import demand function that leads to import price markup adjustments independently of nominal pricing frictions augmenting a two country dsge model with deep habits we obtain low exchange rate pass through to import prices even when nominal local currency price rigidities are negligibly low as nominal pricing frictions become more important the presence of deep habits further impedes the pass through of exchange rate fluctuations estimating model variants with limited information as well as full information methods we find that the deep habits model requires much lower degrees of nominal price rigidities to match empirical measures of the pass through of exchange rate fluctuations to us import prices

asymmetric effects of oil prices and exchange rates on china s industrial prices abstract this paper explores the impacts of positive and negative changes in crude oil price and exchange rate variables on raw material procurement prices and product ex factory prices of china s industrial enterprises we run the nonlinear autoregressive distributed lag nardl model for the full sample from january 2000 to june 2019 and find the existence of the cointegrating relationships and the asymmetries of the long run effects from positive and negative changes in oil price and exchange rate variables then we run the ols and quantile regressions for the two subsamples through the analysis of the estimates in different quantities in the latter model we obtain rich and novel findings the main findings include the inconsistency between the practice of oil price and exchange rate transmissions in china and the usual theoretical explanations and the active roles of china s oil product mechanism and exchange rate policy reforms in mitigating transmission distortions in addition we also find other asymmetries such as the asymmetric effects in different locations of dependent variable s conditional distribution and the different effects on raw material prices and product ex factory prices from the same independent variables

the ineffectiveness of effective tax rates on business investment a critique of feldstein s fisher schultz lecture abstract in his fisher schultz lecture martin feldstein 1982 examined the effects of non neutral tax rules on business investment by estimating three econometric models and he concluded that the rising rate of inflation has because of the structure of existing u s tax rules substantially discouraged investment in the past 15 years in a detailed examination of feldstein s effective tax rate model and a less extensive review of his other formulations neoclassical and return over cost we advance a number of important and independent criticisms and find that these three models fail to support feldstein s conclusion that taxes have exerted a significantly depressing effect on net investment during the recent inflation episode

intermediate goods and business cycles implications for productivity and welfare this paper presents an aggregate demand driven model of business cycles that provides a new explanation for the procyclicality of productivity and simultaneously predicts large welfare losses from monetary nonneutrality the key features of the model are an input output production structure imperfect competition countercyclical markups and for some results state dependent price rigidity true technical efficiency is procyclical even though production takes place with constant returns without technology shocks or technological externalities the paper has observable implications that distinguish it empirically from related work these implications are generally supported by data from u s manufacturing industries copyright 1995 by american economic association

is exchange rate pass through in pork meat export prices constrained by the supply of live hogs this paper investigates the effects of lags in production and marketing of agricultural products on exchange rate pass through erpt in export prices of processed agri food commodities the short run inelastic supply of agricultural goods such as grains and livestock is tied to processors export pricing decisions under certain marketing arrangements the impacts of pre determined supplies on the level of erpt can be measured by regressing export prices on a destination specific exchange rate but also on processed output and exchange rates in other export markets the theoretical predictions of the model are tested by investigating erpt in canadian pork export prices in the u s and japan the empirical methodology accounts for potential unit root and cointegration using a dynamic seemingly unrelated regression framework pre determined hog supplies have a statistically significant impact on erpt in the case of exports to japan the degree of misspecification involved with standard erpt equations is quite large as they fail to reject the null hypothesis of no erpt while significant erpt coefficients are found in the full system approach that accounts for production lags

explaining the exchange rate pass through in different prices abstract this paper examines the performance of a variety of new open economy macroeconomic models in explaining the exchange rate pass through in a wide range of prices quantitative versions of different models are used to derive the dynamic response of various prices to an exchange rate shock predicted responses are compared with the evidence based on var models to examine how well different models fit the data the results show that the best fitting model incorporates a number of features highlighted by different strands of the literature sticky prices sticky wages distribution costs and a combination of local lcp and producer currency pricing pcp

brics how important is the exchange rate pass through this paper analyses the exchange rate pass through erpt into domestic consumer prices in brics brazil russia india china and south africa countries from mid 1990s onwards by using three different econometric approaches i e the single equation approach the var approach and the time varying parameter approach it is also studied the role of macroeconomic determinants in erpt our results suggest that a erpt is higher for the emerging markets with mostly floating exchange rates brazil russia and south africa than for the other brics countries b exchange rate explains on average around the 40 of the price variance for brazil russia and south africa and c inflation volatility exchange rate volatility and openness seem to be the key macroeconomic determinants in brics countries

a unified framework for monetary theory and policy analysis search theoretic models of monetary exchange are based on explicit descriptions of the frictions that make money essential however tractable versions of these models typically make strong assumptions that render them ill suited for monetary policy analysis we propose a new framework based on explicit micro foundations within which macro policy can be studied the framework is analytically tractable and easily quantifiable we calibrate the model to standard observations and use it to measure the cost of inflation we find that going from 10 percent to 0 percent inflation is worth between 3 and 5 percent of consumption much higher than previous estimates

goods prices and exchange rates what have we learned import prices typically change by a smaller proportion than the exchange rate between the exporting and importing country recent research indicates that common currency relative prices for similar goods exported to different markets are highly correlated with exchange rates between those markets this evidence suggests that incomplete pass through is a consequence of third degree price discrimination while distance matters for market segmentation borders have independent effects the source of the border effect has not been clearly identified furthermore there is little evidence yet to suggest substantial market power is implied by the observed price discrimination

price adjustment and exchange rate pass through abstract this paper develops a simple theoretical model that can be used to account for the determinants of exchange rate pass through to consumer prices while recent evidence has found low estimates of pass through in many countries there is little consensus on an explanation for this our paper argues that sticky prices represent a key determinant of exchange rate pass through we make this argument in two stages first holding the frequency of price change constant we show that our model calibrated to data from low inflation countries can reproduce the estimates of very low pass through for these countries the principal determinant of low pass through in this case is the slow adjustment of prices we then extend the model to allow the frequency of price change to be endogenous calibrating to a wider set of countries including both low inflation and high inflation countries we show that our model implies that exchange rate pass through is increasing in average inflation but at a declining rate performing the identical exercise on the data we find a striking correspondence between the predictions of the model and those of the data

financial intermediation in an overlapping generations model with transaction costs abstract we analyze an overlapping generations economy where agents interact to share liquidity risk we show that a pure exchange economy has excessive trade in equilibrium because agents interact to rebalance their portfolios intergenerational financial intermediaries reduce the number of interactions because agents only transact when they face liquidity needs in the absence of asset risk intermediaries match redemptions with deposits and dividends and never sell assets if the economy is subject to transaction costs the intermediated economy can sustain higher stationary investment and welfare we also find that dead weight transaction costs can increase welfare because it protects banks from interbank arbitrage and dampens the inherent cyclicality of market economies

savings asset scarcity and monetary policy abstract this paper analyzes optimal monetary policy regarding asset markets in a model where money and savings are essential and asset markets matter the model is able to explain why different regimes for the correlation of real interest rates and stock price dividend ratios exist and offers two explanations why the correlation vanished after 2007 a decrease in inflation or changes in the supply of risky and safe assets the results on optimal policy show that away from the friedman rule fiscal policy can improve welfare by increasing the amount of outstanding government debt if the fiscal authority is not willing or able to increase debt the monetary authority can improve welfare of current generations by reacting procyclically to asset return shocks

pairwise trade and coexistence of money and higher return assets abstract a new theory of coexistence of money and higher return assets is set out it applies to any setting in which some trade involves an exchange of goods for assets and occurs between two people a buyer and a seller we show that there exists a function mapping the portfolios of the buyer and the seller to the trade that occurs such that i the trade is in the buyer seller core and ii some people are induced to enter the buyer seller meeting with money

optimal monetary policy distribution efficiency versus production efficiency this paper investigates the trade off between distribution effect and production effect of monetary policy when there exist unobservable idiosyncratic liquidity shocks in the absence of risk sharing arrangements such as a credit market monetary policy serves to provide ex post insurance to smooth consumption specifically issuing interest bearing bonds restores credit transactions on money through bond money exchanges such a policy has a positive distribution effect but the resulting inflation hampers production efficiency it is demonstrated that the trade off between distribution efficiency gain and production efficiency loss would result in net welfare enhancement if consumers are relative risk averse enough politique monetaire optimale efficacite dans la distribution versus efficacite dans la production ce memoire examine la relation d equivalence entre l effet sur la distribution et l effet sur la production de la politique monetaire quand existent des chocs de liquidite idiosyncratiques non observables en l absence d arrangement pour le partage des risques tel qu un marche du credit la politique monetaire sert d assurance ex post pour lisser les variations dans les niveaux de consommation specifiquement emettre des obligations qui paient des interets restore les transactions monetaires de credit via les echanges obligations monnaie une telle politique a un effet positif sur la distribution mais l inflation qui en resulte nuit a l efficacite de la production on montre que la relation d equivalence entre les gains d efficacite dans la distribution et la perte d efficacite dans la production resultent en une amelioration du niveau net de bien etre si les consommateurs ont une aversion suffisamment grande au risque relatif

an overlapping generations model with search abstract search is embedded in an overlapping generations model the young participate in a centralized market and then are matched in pairs in a decentralized market the old only participate in the centralized market if the buyer s bargaining power in pairwise trade is close to unity and if the old are risk averse then the golden rule rate of money transfer is positive such risk aversion the pairwise meetings and dependence of the young s saving on the rate of return are necessary for this result

can exchange rate pass through explain the asymmetric gasoline puzzle evidence from a pooled panel threshold analysis of the eu abstract this study contributes to the literature since it tries to link the exchange rate pass through erpt with the rockets and feathers hypothesis using a panel of eu 28 countries allowing for the existence of an endogenous threshold variable our empirical findings indicate that the threshold model is better suited to this analysis than the baseline linear adjustment model this is the case since the latter restricts the threshold to be centered around zero and the dynamic response to cumulative shocks cannot be properly identified the empirical findings reveal that the threshold variable expressed by the trade weighted dollar exchange rate index is statistically significant only in the sample above the threshold high regime this means that for the net eu exporting countries fluctuations in the real effective exchange rate of the us against its major eu trading partners do affect the level of pre tax retail gasoline prices with the relevant elasticity exceeding unity complete erpt moreover all the statistical tests reject the null hypothesis that there is no significant threshold and thus an asymmetric adjustment gasoline mechanism prevails the impulse response functions confirm our empirical findings that erpt can explain asymmetric gasoline pricing within the eu periphery

search money and capital a neoclassical dichotomy recent work has reduced the gap between search based monetary theory and mainstream macroeconomics by incorporating into the search model some centralized markets as well as some decentralized markets where money is essential this paper takes a further step toward this integration by introducing labor capital and neoclassical firms the resulting framework nests a search theoretic monetary model and a standard neoclassical growth model as special cases perhaps surprisingly it also exhibits a dichotomy one can determine the equilibrium path for the value of money independent of the paths of consumption investment and employment in the centralized market

asset trading mechanisms and expansionary policy abstract previous authors have argued that the otimal monetary policy is contractionary if buyers value consumption substantially more than sellers there is some randomness and informational constraints make asset trading useful we show that there is an incentive compatible expansionary policy that dominates all incentive compatible contractionary policies

equivalence results for optimal pass through optimal indexing to exchange rates and optimal choice of currency for export pricing firms sometimes write price lists or catalogs for their exports so they set prices for a period of time and do not adjust prices during that interval in response to changes in their environment the firm sets the price either in its own currency or the importer s currency this paper draws a simple link between the choice of currency and the pricing decision of a firm that changes prices in response to all shocks specifically if the latter firm s price has a lower variance in terms of its own currency than the importer s currency then the firm with a price list will set the price in its own currency and otherwise it will set price in the foreign currency this relationship is established by consideration of the firm with a price list as a special case of a firm that indexes its export price to the exchange rate jel f4 f1

international comparisons of pricing to market behavior this paper measures the degree of price discrimination across export destinations that is associated with exchange rate changes using u s u k german and japanese industry level data given the industries sampled more price discrimination across destinations is observed in the u k german and japanese data for industries that match across source countries however behavior is very similar across source countries furthermore destination specific price adjustment on exports to the united states from germany and japan is similar to price adjustment observed on shipments to other destinations most variation in the data appears to be related to industry copyright 1993 by american economic association