Revisiting Perverse Effects on Exchange Rate Pass-Through

Koji Okuguchi
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Koji Okuguchi: Department of Economics and Information, Gifu Shotoku Gakuen University, Japan

International Journal of Business and Economics, 2005, vol. 4, issue 1, 67-76

Abstract: The effects of a change in the exchange rate on product prices are investigated using a static international duopoly model without product differentiation. A general condition is derived for perverse exchange rate pass-through assuming decreasing marginal costs for firms in two trading countries. The result is clarified on the basis of a new diagram for determining equilibrium supplies in the two countries.

Keywords: exchange rate pass-through; international duopoly; decreasing marginal cost (search for similar items in EconPapers)
JEL-codes: F1 L1 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (1)

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