This study examines export pricing to market (PTM) in a ‘small-country’ context using a panel of disaggregated exports from Hong Kong since 1992. Conventional wisdom is that PTM is commonplace – except for U.S. exports. This study provides a benchmark by which to interpret the puzzling...

This paper builds upon the empirical literature on the macroeconomic impact of real exchange rate depreciations for a sample of 27 emerging economies. We find that real exchange rate depreciations tend to increase a country’s risk premium. This effect is neither linear nor symmetric: large...

This paper examines a two-country new open economy macroeconomics model with price stickiness a la Taylor, where exporters' choice of invoicing currency is endogenous. Besides generating incomplete pass-through, the model yields four main results. First, firms' invoicing strategy is generally...

A crucial question centering many recent debates in the international macroeconomics is under which currency the price is sticky. This paper provides a microfoundation to study the firm¡¦s choice of price setting currency in the sticky price model. I first prove that the risk preference is a...

We offer evidence in this paper that US interest rate policy has an important influence in the determination of credit spreads on emerging market bonds over US benchmark treasuries, and therefore on their cost of capital. Our analysis improves upon the existing literature and understanding, by...

The issue of whether Mercosur needs closer macroeconomic policy harmonization, and in particular an exchange-rate stabilization agreement or even a single currency is discussed. Three views are offered on the links between exchange rates and regional integration. The option for monetary union is...

The empirical distinction between de facto and de jure exchange rate regimes raises a number of interesting questions. Which factors may induce a de facto peg? Why do countries enforce a peg but do not announce it? Why do countries 'break their promises'? In this paper we show that a stable...

The paper develops a simple stochastic new open economy macroeconomic model based on sticky nominal wages. Explicit solution of the wage-setting problem under uncertainty allows one to analyze the effects of the monetary regime on welfare, expected output, and the expected terms of trade....

We apply a comprehensive set of survey data, on forecasts for 24 currencies against the dollar, to four topics. (1) We find some predictive power in the survey data (and in the right direction!). As in past tests, the forecasts are nevertheless biased: variability of expected depreciation is...