Authors:

  • Gita Gopinath

Excerpt

International Prices, Costs and Mark-up differences. Gita Gopinath, August 17, 2010, Paper. "Relative cross-border retail prices, in a common currency, co-moves closely with the nominal exchange rate. Using a data set with product level retail prices and wholesale costs for a large grocery chain operating in the U.S. and Canada, we decompose this variation into relative wholesale costs and relative markup components. We find that the correlation of the nominal exchange rate with the real exchange rate is mainly driven by changes in relative wholesale costs, arguably the most tradable component of a retailer’s costs..." Link