Exchange rates, prices and international trade in a model of endogeneous market structure
Aksoy, Yunus and Lustig, H.N. (2007) Exchange rates, prices and international trade in a model of endogeneous market structure. The Manchester School 75 (2), pp. 160-192. ISSN 1463-6786.
We suggest a new dynamic equilibrium approach that features product differentiation and endogenizes market structure at the same time. The model yields clear-cut predictions regarding the effects of small and large exchange rate shocks on the market structure, pass-through and international trade. First, we account for the asymmetric price adjustment process with respect to exchange rate shocks. Second, we discuss an array of conditions where short- and long-run international monetary neutrality is violated. We present in detail under which conditions imperfect competition is able to generate persistent and volatile real exchange rate deviations. Most predictions survive alternative market configurations.
|School:||Birkbeck Schools and Departments > School of Business, Economics & Informatics > Economics, Mathematics and Statistics|
|Research Centre:||Applied Macroeconomics, Birkbeck Centre for|
|Depositing User:||Yunus Aksoy|
|Date Deposited:||26 Mar 2008 15:23|
|Last Modified:||06 Dec 2016 14:49|
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