What is it about?

This paper shows that the pricing behavior of exporting firms exhibits a “forward-looking” nature with sticky prices. As a result, the expectations of future exchange rates affect current prices at both the product level and firm level.

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Why is it important?

It provides evidence for a previously unexplored micro-level forward-looking nature of trade price adjustment as response to future exchange rates, and suggest a potentially important factor in helping explain incomplete exchange rate pass-through.

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This page is a summary of: Price Adjustment to Exchange Rates and Forward-looking Exporters: Evidence from USA-China Trade, Review of International Economics, July 2016, Wiley,
DOI: 10.1111/roie.12246.
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