The closed and open economy literatures both work on evaluating the role of real rigidities, but in parallel. This paper brings the two literatures together. We use international price data and exchange rate shocks to evaluate the importance of real rigidities in price setting. We show that,...

The closed and open economy literatures both work on evaluating the role of real rigidities, but in parallel. This paper brings the two literatures together. We use international price data and exchange rate shocks to evaluate the importance of real rigidities in price setting. We show that,...

This paper investigates the effects of fixed versus flexible exchange rates on firms` location choices and on countries` specialization patterns. In a two-country, two-differentiated-goods monetary model, demand, supply, and monetary (as well as exchange rate) shocks arise after wages are set...

This paper studies the impact of real exchange rate volatility on firm level investment using data on Indian manufacturing firms. Real exchange rate volatility is found to have a negative impact on firm level investment spending. The impact is non-linear in the level of exchange rate volatility...

This paper studies the impact of real exchange rate volatility on firm level employment using a dynamic panel data model applied on a panel of 700 Indian manufacturing firms. Real exchange rate volatility is found to have a significant and negative impact on firm level employment growth. Access...

We explore the real effective exchange rate (REER) effects on the share of exports of Indian non-financial sector firms for the period 2000–2010. Our empirical analysis reveals that, on average, there has been a strong and significant negative impact from currency appreciation and currency...

We explore the real effective exchange rate (REER) effects on the share of exports of Indian non-financial sector firms for the period 2000 to 2010. Our empirical analysis reveals that, on average, there has been a strong and significant negative impact from currency appreciation and currency...

How strong are strategic complementarities in price setting across firms? In this paper, we provide a direct empirical estimate of firm price responses to changes in prices of their competitors. We develop a general framework and an empirical identification strategy to estimate the elasticities...

Using highly disaggregated transaction-level trade data, we document the importance of new firmlevel trade partner relationships and the addition of new products to existing relationships in driving long-run import flows. Moreover, we find that these margins are sensitive to movements in the...

Dick Sabot, an active member of CGD's founding Board of Directors, was finishing this paper when he died suddenly on July 6 of 2005. The paper highlights the risks to developing countries posed by the growing U.S. external deficit and describes three possible scenarios. In the first, the US...