Export pricing and the cross-country correlation of stock prices

Juha Tervala

No 28/2009, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: This study analyses cross-country correlations of stock prices (values of firms) using the basic New Open Economy Macroeconomics model. We show that cross-country correlations of stock prices greatly depend on the currency of export pricing in the case of monetary shocks but not notably for temporary technology shocks. In the case of a money supply shock, the producer (local) currency pricing version of the model generates a negative (positive) cross-country correlation of stock prices.

Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2009_028

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