Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/145494
Authors: 
Enders, Zeno
Buzaushina, Almira
Hoffmann, Mathias
Year of Publication: 
2016
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2016: Demographischer Wandel - Session: International Macroeconomics G16-V1
Abstract: 
This paper provides an explanation for the observed decline of the exchange rate pass-through into import prices by modeling the effects of financial market integration on the optimal choice of the pricing currency in the context of rigid nominal goods prices. Contrary to previous literature, we take the interdependence of this choice with the optimal portfolio choice of internationally traded financial assets explicitly into account. In particular, price setters move towards more localcurrency pricing and portfolios include more foreign debt assets following increased financial integration. Both predictions are in line with novel empirical evidence.
JEL: 
F41
F36
F31
Document Type: 
Conference Paper

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