Distribution Costs and Real Exchange Rate Dynamics During Exchange-Rate-Based Stabilization

Sergio Rebelo (), Joao C Neves and Ariel Burstein

No 2944, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This Paper studies the role played by distribution costs in shaping the behaviour of the real exchange rate during exchange-rate-based stabilizations. We document that distribution costs are very large for the average consumer good: the represent more than 40% of the retail price in the US and 60% of the retail price in Argentina. Distribution services require local labour and so so they drive a natural wedge between retail prices in different countries. We show that introducing a distribution sector in an otherwise standard model of exchange-rate-based stabilizations dramatically improves its ability to rationalise observed real exchange rate dynamics.

Keywords: Real exchange rate; Distribution; inflation; Stabilization; Fixed exchange rates (search for similar items in EconPapers)
JEL-codes: F41 (search for similar items in EconPapers)
Date: 2001-09
References: Add references at CitEc
Citations: View citations in EconPapers (34)

Downloads: (external link)
https://cepr.org/publications/DP2944 (application/pdf)

Related works:
Journal Article: Distribution costs and real exchange rate dynamics during exchange-rate-based stabilizations (2003)
Working Paper: Distribution Costs and Real Exchange Rate Dynamics During Exchange-Rate-Based-Stabilizations (2000)
Working Paper: Distribution Costs and Real Exchange Rate Dynamics During Exchange-Rate-Based Stabilizations (2000)
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:cpr:ceprdp:2944

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP2944

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().