State-dependent pricing, local-currency pricing, and exchange rate pass-through

Anthony Landry ()

Journal of Economic Dynamics and Control, 2010, vol. 34, issue 10, 1859-1871

Abstract: This paper presents a two-country DSGE model with state-dependent pricing as in Dotsey et al. (1999) in which firms discriminate across countries by setting prices in local currency. In this model, a domestic monetary expansion has greater spillover effects to foreign prices and foreign economic activity than an otherwise identical model with time-dependent pricing. In addition, the predictions of the state-dependent pricing model match the business-cycle moments better than the predictions of the time-dependent pricing model when driven by monetary policy shocks.

Keywords: International; business; cycle; State-dependent; pricing; Local-currency; pricing; Exchange; rate; pass-through (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (13)

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Working Paper: State-dependent pricing, local-currency pricing, and exchange rate pass-through (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:34:y:2010:i:10:p:1859-1871

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