Exchange Rate Volatility, Pricing to Market and Trade Smoothing

This paper investigates the consequences of exchange rate volatility on the variability of export prices and quantities in the presence of market segmentation and pricing to market. Firms stabilize destination prices through systematic price discrimination, limiting the degree of exchange rate pass-...

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Bibliographic Details
Main Author: Faruqee, Hamid
Other Authors: Clark, Peter
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 1997
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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245 0 0 |a Exchange Rate Volatility, Pricing to Market and Trade Smoothing  |c Hamid Faruqee, Peter Clark 
260 |a Washington, D.C.  |b International Monetary Fund  |c 1997 
300 |a 39 pages 
651 4 |a United States 
653 |a Inflation 
653 |a Government and the Monetary System 
653 |a Payment Systems 
653 |a Import prices 
653 |a Regimes 
653 |a Monetary economics 
653 |a Deflation 
653 |a Exchange rate adjustments 
653 |a Open Economy Macroeconomics 
653 |a Currency 
653 |a Money 
653 |a Price Level 
653 |a Foreign Exchange 
653 |a Standards 
653 |a Exports 
653 |a Currencies 
653 |a Monetary Systems 
653 |a Macroeconomics 
653 |a Exchange rates 
653 |a Export prices 
653 |a Money and Monetary Policy 
653 |a Imports 
653 |a Foreign exchange 
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520 |a This paper investigates the consequences of exchange rate volatility on the variability of export prices and quantities in the presence of market segmentation and pricing to market. Firms stabilize destination prices through systematic price discrimination, limiting the degree of exchange rate pass-through. Consequently, the variability of exchange rates is not fully translated into prices and quantities at the point of destination. Empirical estimates using aggregate price data for the G-7 industrial countries show incomplete pass-through in variances, with considerable variation among these countries. U.S. industry specific data also indicate incomplete pass-through in most cases, with considerable variation across industries