International Prices and Exchange Rates

By Ariel T. Burstein, Gita Gopinath. 2013

466 citations recorded by the source corpus.

We survey the recent empirical and theoretical developments in the literature on the relation between prices and exchange rates. After updating some of the major findings in the empirical literature, we present a simple framework to interpret this evidence. We review theoretical models that generate insensitivity of prices to exchange rate changes through variable markups, both under flexible prices and nominal rigidities, first in partial equilibrium and then in general equilibrium.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/9b87c6e6106841f9f28b1fbcce4372d3cbc9312b

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In Economics and Econometrics

Citations in the corpus

The Distributional Consequences of Large Devaluations (2017, background): “1These patterns were first documented by Burstein et al. (2005) for 5 large devaluations. In summarizing the literature, Burstein and Gopinath (2015) extend these findings to include more devaluation episodes. 2This was documented as early as the 19th century by Engel (1857, 1895, "Engel’s Law"). Fo”
U.S. Monetary Policy and International Risk Spillovers (2019, background): “(4)Another argument for preventing exchange rate volatility is the high degree of pass-through into domestic inflation in emerging markets as argued by Burstein and Gopinath (2014). (5)Expenditure switching might be dampened under dominant currency pricing. Gopinath (2016)’s Jackson Hole paper argue”
International Shocks, Variable Markups, and Domestic Prices (2019, methodology): “Equation (4) is a generalization of the accounting framework for price changes developed by Gopinath, Itskhoki, and Rigobon (2010) and used in Burstein and Gopinath (2013). It decomposes rm i’s price change dpit into responses to its own cost shock dmcit, to its competitor’s price changes dp−it, and”
The International Price System (2015, methodology): “To estimate pass-through, I will employ a dynamic lag specification that is standard in the empirical literature, as in Campa and Goldberg (2005) and Burstein and Gopinath (2014).”
Exchange Rate Disconnect in General Equilibrium (2017, unknown): “In addition, our framework can be used as a theoretical foundation for the vast empirical literature that relies on exchange rate variation for identification (see, e.g., Burstein and Gopinath 2012).”
Goods Prices and Availability in Cities (2011, unknown): “, Broda and Weinstein (2008); Burstein and Jaimovich (2009); Gopinath et al. (2011)).”
The Billion Prices Project: Using Online Prices for Measurement and Research (2016, background): “Burstein and Gopinath (2013) provide a review of the empirical literature on relative prices and exchange rates, and a discussion of some theoretical advances, including accounting for non-tradeables or tradeables that are only locally consumed, variable markups, and pricing-to-market.”
Dominant Currency Paradigm (2020, unknown): “There is, however, pervasive evidence that the law of one price fails to hold as surveyed in Burstein and Gopinath (2014).”
Importers, exporters, and exchange rate disconnect (2014, unknown): “Although this prediction is not universal for other demand structures, it emerges in a wide class of models, as surveyed in Burstein and Gopinath (2012). In Section 3, we directly test this prediction and find no evidence of non-monotonicity in the data.”