This book provides the first in-depth analysis of the relationship between exchange rates and the prices of internationally traded goods, using Australian imports of manufactures as a case study. The study is conducted in two stages: first, exchange rate pass-through elasticites are estimated by...

"We introduce the real exchange rate volatility curve as a useful device to understand the role of price stickiness in accounting for deviations from the Law of One Price at the sector level. In the presence of both nominal and real shocks, the theory predicts that the real exchange rate...