Title
Exchange rate shocks and the speed of trade price adjustment
Document Type
Journal article
Source Publication
Southern Economic Journal
Publication Date
7-1-2000
Volume
67
Issue
1
First Page
200
Last Page
211
Abstract
A quantity adjustment cost model is developed in the context of international trade along the lines proposed by Krugman (1987). The model implies that prices adjust dynamically to exchange rate fluctuations. The price adjustment speed is determined as a function of foreign demand responsiveness, the appropriate discount rate, and an adjustment cost parameter. Pass-through is incomplete and increases over time and with the speed of price adjustment A preliminary empirical analysis finds that the speed of price adjustment from the time series by industry and then in a cross-sectional repression tentatively relates the obtained adjustment speeds to their theoretical determinants.
DOI
10.2307/1061621
Print ISSN
00384038
E-ISSN
23258012
Publisher Statement
Copyright © 2000 Southern Economic Association
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Ran, J., & Balvers, R. (2000). Exchange rate shocks and the speed of trade price adjustment. Southern Economic Journal, 67(1), 200-211. doi: 10.2307/1061621
