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Author: | Goldberg, P. K. Knetter, M. M. |
Title: | Goods prices and exchange rates: What have we learned? |
Journal: | Journal of Economic Literature
1997 : SEP, VOL. 35:3, p. 1243-1272 |
Index terms: | CONSUMER GOODS PRICES EXCHANGE RATES |
Language: | eng |
Abstract: | Deviations in the law of one price are not just an artifact of nonidentical goods, and incomplete pass-through is not just a result of changes in world prices. They both appear to be largely a result of third-degree price discrimination. Although there is substantial variation across industries, in many cases half or more of the effect of an exchange rate change is offset by destination-specific adjustments of markups over cost. This means that large and persistent deviations from the law of one price occur on a regular basis. National markets for goods are better viewed as segmented than integrated. |
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