We survey the recent empirical and theoretical developments in the literature on the relation between prices and exchange rates. After updating some of the major findings in the empirical literature, we present a simple framework to interpret this evidence. We review theoretical models that...

In this paper we study the macroeconomic effects of large exchange rate appreciations. Using a sample of 128 countries from 1960-2008, we identify large nominal and real appreciations shocks and study their macroeconomic effects in a dummy-augmented panel autoregressive model. Our results show...

This working paper was written by Yin-wong Cheung (University of California, Santa Cruz) and Kon S. Lai (California State University, Los Angeles).This study investigates whether greater nominal exchange rate flexibility aids real exchange rate adjustment based on data from dual exchange rates...

The focus is upon equilibrium real exchange rates, optimal external debt and their interaction, in a world where both the return on investment and the real rate of interest are stochastic variables. These theoretically based measures are applied empirically to answer the following questions:...

We present a new data fact: in response to a monetary tightening, the nominal exchange tends to appreciate in developed countries but depreciate in developing countries. A model is formalized to rationalize this puzzling pattern. It has three key channels of monetary transmission: a liquidity...

Il presente articolo esamina i vantaggi relativi dei tassi di cambio fluttuanti nei confronti di un regime di tassi di cambio a parità rigidamente ancorate (hard peg), ponendo particolare enfasi sulle implicazioni per la domanda effettiva. In particolare, esso valuta se un deprezzamento della...

During emerging market crises, domestic agents might have sufficient collateral to borrow from the other domestic agents, but they are unable to borrow from foreigners because the country, as a whole, lacks international collateral. In this setting, we show that an (ex-post) optimizing central...

The importance of trade costs in segmenting product markets cannot be captured by considering aggregate prices or in the absence of information on the direction of trade. We address this problem by utilizing product-specific prices along with cross-sectional productivity measures and bilateral...