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Non-Price Competition and Exchange Rate Pass-Through

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  • Aurora Ascione

Abstract

A substantial body of empirical works document that exchange rate pass-through to consumer prices is incomplete. This evidence has cast doubts on the ability of flexible exchange rates to generate expenditure switching. In a dynamic stochastic discrete-time duopoly game, non-price competition among .rms endogenously originates a degree of exchange ratepass-through close to zero together with an expenditure switching e¤ect stronger than in the standard models.

Suggested Citation

  • Aurora Ascione, 2007. "Non-Price Competition and Exchange Rate Pass-Through," Economics Working Papers ECO2007/54, European University Institute.
    • Handle: RePEc:eui:euiwps:eco2007/54
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    References listed on IDEAS

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    More about this item

    Keywords

    pass-through; non-price competition; expenditure switching;
    All these keywords.

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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