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

Ariel Burstein, Joao C. Neves and Sergio Rebelo ()
Additional contact information
Joao C. Neves: Portuguese Catholic university

No 473, RCER Working Papers from University of Rochester - Center for Economic Research (RCER)

Abstract: This paper studies the role played by the distribution sector in shaping the behavior of the real exchange rate during exchange-rate-based stabilizations. We use data for the U.S. and Argentina to document the importance of distribution margins in retail prices and disaggregated price data to study price dynamics in the aftermath of Argentina's 1991 Convertibility plan. Distribution services require local labor and land so they drive a natural wedge between retail prices in different countries. We study in detail the impact of introducing a distribution sector in an otherwise standard model of exchange-rate-based stabilizations. We show that this simple extension improves dramatically the ability of the model to rationalize 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)
Pages: 51 pages
Date: 2000-05
New Economics Papers: this item is included in nep-dge and nep-ifn
References: Add references at CitEc
Citations: View citations in EconPapers (109)

Downloads: (external link)
http://rcer.econ.rochester.edu/RCERPAPERS/rcer_473.pdf full text (application/pdf)
None

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 Stabilization (2001)
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:roc:rocher:473

Access Statistics for this paper

More papers in RCER Working Papers from University of Rochester - Center for Economic Research (RCER) University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by Richard DiSalvo ( this e-mail address is bad, please contact ).