This paper argues that the stability of exchange-rate pass-through is not well tested in common econometric specifications of pass-through equations. This is because (1) expected future exchange-rate changes are an important omitted variable in these estimations, and (2) the use of aggregate...

Using a panel of 51 prices from 48 cities in the United States we provide an upper bound estimate of the rate of convergence to purchasing power parity. We find convergence rates substantially higher than typically found in cross-country data. We investigate some potentially serious biases...

This paper casts doubt on the validity of the hysteresis hypothesis as an explanation of the persistent U.S. trade deficits in the 1980s. The authors propose two tests to investigate two different implications of the hypothesis. The first implication is that cumulative changes in exchange rates,...

This paper presents new evidence that a positive association exists between inflation and relative prices and relative inflation rates in very disaggregated data for the United States over the period 1975 through 1992. There is also evidence that the response of relative prices and relative...

This paper studies the effect of instrumental and institutional stabilization of exchange rate volatility on the integration of goods markets. Rather than using data on volume of trade, this paper employs a 3-dimensional panel of prices of 95 very disaggregated goods (e.g., light bulbs) in 83...