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Passthrough of Exchange Rates and Purchasing Power Parity / Robert C. Feenstra, Jon D. Kendall.
- Format:
- Book
- Author/Creator:
- Feenstra, Robert C.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w4842.
- NBER working paper series no. w4842
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1994.
- Summary:
- In this paper we develop and test two hypotheses about purchasing power parity (PPP) derived from the pricing behavior of profit- maximizing, exporting firms. The first is that changes in the price of traded goods relative to domestic substitutes, due to partial pass- through of exchange rates, will affect the PPP relation. The second is that PPP should hold on forward rather than spot exchange rates, due to hedging by firms. Using quarterly data for the United States, Canada, France, Germany, Japan and the United Kingdom, we find considerable support for the first but not the second hypothesis.
- Notes:
- Print version record
- August 1994.
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