The Relationship between the Law of One Price and Exchange Rate Pass-through

Jayant Menon ()

Economia Internazionale / International Economics, 1995, vol. 48, issue 4, 551-568

Abstract: The volatility in exchange rates has brought to the forefront the relationship between exchange rate movements and the prices of traded goods. A vast body of literature examining this important issue exists separately under two general headings, namely tests of the “law of one price” and “exchange rate pass-through” analysis. So far, there has not been any attempt to understand the relationship between the two. This is a serious omission, since it leaves a number of important questions unanswered. This paper clarifies these issues by deriving two fundamental propositions on the inter-relationships between exchange rate pass-through and the law of one price. It also draws out the implications of these inter-relationships for the study of exchange rates and prices, and for policy.

Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (11)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:ris:ecoint:0389

Access Statistics for this article

Economia Internazionale / International Economics is currently edited by Giovanni Battista Pittaluga

More articles in Economia Internazionale / International Economics from Camera di Commercio Industria Artigianato Agricoltura di Genova Via Garibaldi 4, 16124 Genova, Italy. Contact information at EDIRC.
Bibliographic data for series maintained by Angela Procopio ().