Currency Choice and Exchange Rate Pass-Through
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Rigobon_Currency choice.pdf
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580.52 KB
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Adobe PDF
Checksum (MD5)
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Author(s)
Gopinath, Gita
Itskhoki, Oleg
Rigobon, Roberto
Date Issued
March 2010
Journal
American Economic Review
Publisher
American Economic Association
Citation
Gopinath, Gita, Oleg Itskhoki, and Roberto Rigobon. “Currency Choice and Exchange Rate Pass-Through.” American Economic Review 100.1 (2010): 304–336.
Version
Final published version
Abstract
We show, using novel data on currency and prices for US imports, that even conditional on a price change, there is a large difference in the exchange rate pass-through of the average good priced in dollars (25 percent) versus nondollars (95 percent). We document this to be the case across countries and within disaggregated sectors. This finding contradicts the assumption in an important class of models that the currency of pricing is exogenous. We present a model of endogenous currency choice in a dynamic price setting environment and show that the predictions of the model are strongly supported by the data. (JEL E31, F14, F31)
MIT Department
Sloan School of Management
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/aer.100.1.304
