Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212958 
Year of Publication: 
2003
Series/Report no.: 
Bank of Finland Studies No. E:25
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This paper investigates price setting of internationally traded goods.We develop a theoretical model that incorporates sticky prices in the currency of both the buyer (local currency pricing) and seller (producer currency pricing).The nature of price setting is thus forward looking and the exchange rate effect depends on the relative share of local currency and producer currency pricing firms in the economy.The model is estimated with Finnish foreign trade, price data for the. period 1980-1998 The estimation results seem to support the model.The estimated share of local currency pricing is 40 percent, in the export sector and 60 percent, in the import sector implying that there is limited pass-through from exchange rate to destination- country prices in both sectors.
Subjects: 
local currency pricing
producer currency pricing
GMM
Finnish foreign trade prices
Persistent Identifier of the first edition: 
ISBN: 
952-462-045-6
Document Type: 
Book

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