Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Dallas
Globalization Institute Working Papers
State-dependent pricing, local-currency pricing, and exchange rate pass-through
Anthony E. Landry
Abstract

This paper presents a two-country DSGE model with state-dependent pricing as in Dotsey, King, and Wolman (1999) in which firms price-discriminate across countries by setting prices in local currency. In this model, a domestic monetary expansion has greater spillover effects to foreign prices and foreign economic activity than an otherwise identical model with time-dependent pricing. In addition, the predictions of the state-dependent pricing model match the business-cycle moments better than the predictions of the time-dependent pricing model when driven by monetary policy shocks.


Download Full text
Cite this item
Anthony E. Landry, State-dependent pricing, local-currency pricing, and exchange rate pass-through, Federal Reserve Bank of Dallas, Globalization Institute Working Papers 39, 2009.
More from this series
Note: Published as: Landry, Anthony (2010), "State-Dependent Pricing, Local-Currency Pricing, and Exchange Rate Pass-Through," Journal of Economic Dynamics and Control 34 (10): 1859-1871.
JEL Classification:
Subject headings:
For corrections, contact Amy Chapman ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal