Understanding European Real Exchange Rates

Mario John Crucini (), Chris I. Telmer and Marios Zachariadis ()

American Economic Review, 2005, vol. 95, issue 3, pages 724-738

Abstract: We study good-by-good deviations from the Law-of-One-Price (LOP) for over 1,800 retail goods and services between all European Union (EU) countries for the years 1975, 1980, 1985, and 1990. We find that for each of these years, after we control for differences in income and value-added tax (VAT) rates, there are roughly as many overpriced goods as there are underpriced goods between any two EU countries. We also find that good-by-good measures of cross-sectional price dispersion are negatively related to the tradeability of the good, and positively related to the share of non-traded inputs required to produce the good. We argue that these observations are consistent with a model in which retail goods are produced by combining a traded input with a non-traded input.

Date: 2005
View list of references View citations in EconPapers

Downloads: (external link)
http://hdl.handle.net/10.1257/0002828054201332 (text/html)
http://www.aeaweb.org/articles/article_detail.php? ... &issue_date=June2005 (application/pdf)
http://www.e-aer.org/data/june05_data_crucini.zip dataset accompanying article (application/zip)
Access to full text is restricted to AEA members.

Related works:
Working Paper: Understanding European Real Exchange Rates
Working Paper: Understanding European Real Exchange Rates (2001)
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: http://EconPapers.repec.org/RePEc:aea:aecrev:v:95:y:2005:i:3:p:724-738

Ordering information: This journal article can be ordered from
http://www.aeaweb.org/subscribe.html

Access Statistics for this article

American Economic Review is edited by Robert Moffitt

More articles in American Economic Review from American Economic Association
Contact information at EDIRC.
Series data maintained by Christopher F. Baum ().