The effect of exchange rates on prices, wages, and profits: a case study of the United Kingdom in the 1990s
No 772, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)
During the 1990s the United Kingdom experienced large and sudden exchange rate movements that had no apparent impact on overall consumer prices. This paper shows that the stability of U.K. consumer prices was made possible in part by offsetting movements in the price-cost margins of foreign exporters and in part by offsetting price-cost margins in the U.K. distribution sector. At the same time, U.K. manufacturers experienced margin swings in the opposite direction, largely due to their role as exporters. Thus, sterling depreciation boosted the profits of U.K. manufacturers and squeezed the profits of U.K. distributors, while sterling appreciation had the opposite effects.
Keywords: Foreign; exchange; rates (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-ifn and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Journal Article: The effect of exchange rates on prices, wages, and profits: A case study of the United Kingdom in the 1990s (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:772
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ().