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Asymmetry and Hysteresis: Two Perspectives on Pricing-to-Market Nonlinearity

Author

Listed:
  • Svetlana Fedoseeva

    (University of Giessen)

  • Laura M. Werner

    (University of Giessen)

Abstract

Pricing decisions of exporters, who are facing imperfect competition in their destination markets, might depend on exchange rate changes. While empirical literature often assumes that the impact of the exchange rate on the exporters’ prices is linear and the markup adjustment does not depend on magnitude or direction of the exchange rate change, we question this statement and test for hysteresis and asymmetry of pricing-to-market (PTM). Using the German export beer market as an example, we show that both types of nonlinearities play an important role in PTM decisions.

Suggested Citation

  • Svetlana Fedoseeva & Laura M. Werner, 2014. "Asymmetry and Hysteresis: Two Perspectives on Pricing-to-Market Nonlinearity," Working Papers 2014.02, International Network for Economic Research - INFER.
    • Handle: RePEc:inf:wpaper:2014.02
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    References listed on IDEAS

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    Cited by:

    1. Bagnai, Alberto & Mongeau Ospina, Christian Alexander, 2015. "Long- and short-run price asymmetries and hysteresis in the Italian gasoline market," Energy Policy, Elsevier, vol. 78(C), pages 41-50.
    2. Ansgar Belke & Sebastian Ptok, 2018. "British-European Trade Relations and Brexit: An Empirical Analysis of the Impact of Economic and Financial Uncertainty on Exports," IJFS, MDPI, vol. 6(3), pages 1-22, August.

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