Exchange Rates, Wages, and Export Price Dynamics

Pia Fromlet ()
Additional contact information
Pia Fromlet: National Institute of Economic Research, Postal: National Institute of Economic Research, P.O. Box 3116, SE-103 62 Stockholm, Sweden, http://www.konj.se

No 132, Working Papers from National Institute of Economic Research

Abstract: In this paper, the effects on export prices (in the currency of the exporter) of shocks to the exchange rate, the exporting firms' costs and foreign prices are investigated. The theoretical analysis is done with alternative assumptions regarding the currency in which prices are set and the desired markup. After that, a VAR-framework is used to analyze which theory predicts actual outcome the best.

The results indicate that export prices (in the currency of the exporter) respond strongly to exchange rate shocks and the effects seem to be in line with the theory of producer currency pricing and pricing to market. Wage shocks have insignificant effects.

Keywords: Vector autoregression; exchange rates; export prices; local currency pricing; producer currency pricing; pricing to the market (search for similar items in EconPapers)
JEL-codes: E31 F14 F31 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2013-11-26
New Economics Papers: this item is included in nep-int, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.konj.se/download/18.42684e214e71a39d072 ... t-Price-Dynamics.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:nierwp:0132

Access Statistics for this paper

More papers in Working Papers from National Institute of Economic Research National Institute of Economic Research, P.O. Box 3116, SE-103 62 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Sarah Hegardt Grant ( this e-mail address is bad, please contact ).