This paper attempts to examine the behaviour of the exchange rate in response to a change in interest rate differential. The empirical results of the study based on mounthly data from Britain, Canada, Germany and Japan provide support for Dornbusch's "overshooting" exchange rate in the...

Previous research has found industry- and time-varying effects of the exchange rate on domestic producer prices in China for the years 1980-2002. In this study, I examine the determinants of these variations. The variation of pass-through elasticity across industries is explained by a set of...

This article analyses the effects of the real value of the dollar on investment in US domestic manufacturing using aggregate data for 1973-2004. Econometric estimation shows a negative effect that is much larger than has been found in any previous study. The exchange rate affects investment...

Exchange rates can have a major influence on the pricing behaviour and profitability of exporting and importing firms. Firms differ in the extent to which they "pass-through" changes in exchange rates into the prices they charge in foreign markets. They also differ in their "exposure" to...