Distribution costs and real exchange rate dynamics during exchange-rate-based stabilizations
By Ariel T. Burstein, J. Neves, Sergio Rebelo. 2003
169 citations recorded by the source corpus.
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.
Subfields: Economics and Econometrics, Finance
View Paper: https://www.semanticscholar.org/paper/5dbc2544da19b34dd33b9855567d9ecf9cd4c80a
Citations in the corpus
- International Prices and Exchange Rates (2013, unknown): “Burstein et al. (2003) and Campa and Goldberg (2010) calculate the distribution wedge for consumer goods in the U.S. and other OECD countries using Input-Output tables, while Berger et al. (2009) use matched micro price data in the U.S.”
- The value of fiscal discipline for oil-exporting countries (2012, unknown): “As in Burstein, Neves, and Rebelo (2003), the distribution sector is competitive so the retail price of tradable goods is equal to the marginal cost.”
- How do different exporters react to exchange rate changes? Theory, empirics and aggregate implications (2009, unknown): “It is expressed as a Cobb-Douglas in labor of the Home country and labor in country , with shares and 1− respectively: () = μ ¶ () 1− = −1− (15)”
- Inflation and exchange rate pass-through (2019, unknown): “In particular, distribution costs drive a significant wedge between producer and retail prices (Burstein, Neves, and Rebelo 2003; Corsetti and Dedola 2005; Berger et al. 2012).”
- Equivalence Results for Optimal Pass-Through, Optimal Indexing to Exchange Rates, and Optimal Choice of Currency for Export Pricing (2006, unknown): “8 For example, Goldberg and Verboven (2001), Burstein, Neves, and Rebelo (2003), Burstein, Eichenbaum, and Rebelo (2002), and Goldberg and Camap (2004). adjustment of prices to distinguish the two types of models, the evidence could be consistent with either LCS or LCP.9 As Friberg (1998) has…”
- Nonparametric Counterfactual Predictions in Neoclassical Models of International Trade (2017, unknown): “Within the context of a neoclassical model, such findings can be rationalized by assuming that foreign goods need to be distributed, which requires local factors of production, as in Burstein, Neves and Rebelo (2003). In such a model, there is incomplete pass-through into consumer prices, as observe”