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Macroeconomics of international price discrimination
| Content Provider | Library of Congress - Books/Printed Material |
|---|---|
| Author | Corsetti, Giancarlo. |
| Temporal Coverage | 2002 |
| Abstract | "This paper builds a baseline two-country model of real and monetary transmission under optimal international price discrimination. Distributing traded goods to consumers requires nontradables; because of distributive trade, the price elasticity of export demand depends on the exchange rate. Profit-maximizing monopolistic firms drive a wedge between wholesale and retail prices across countries. This entails possibly large deviations from the law of one price and incomplete pass-through on import prices. Yet, consistent with expenditure-switching effects, a nominal depreciation generally worsens the terms of trade. Moreover, the exchange rate and the terms of trade can be more volatile than fundamentals. For plausible ranges of the distribution margin, there can be multiple steady states, whereas large differences in nominal and real exchange rates across equilibria translate into small differences in consumption, employment and the price level. Finally, we show that with competitive goods markets international policy cooperation is redundant even under financial autarky"--Federal Reserve Board web site. |
| Language | English |
| Publisher | Federal Reserve Board, |
| Publisher Place | Washington, D.C. |
| Part of Series | Catalog |
| Requires | HTML5 supported browser |
| Access Restriction | Open |
| Subject Keyword | Exchange Rate Pass-through International Cooperation Nominal Rigidities Optimal Cyclical Monetary Policy Wholesale and Retail Services |
| Subject Domain (in LCSH) | Exchange rate pass-through; |
| Subject Domain (in LCSH) | wholesale and retail services; |
| Subject Domain (in LCSH) | nominal rigidities; |
| Subject Domain (in LCSH) | optimal cyclical monetary policy; |
| Subject Domain (in LCSH) | international cooperation |
| Subject Domain (in LCC) | HG3879 |
| Content Type | Text |
| Resource Type | Book |
