Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/60544
Authors: 
Broda, Christian
Year of Publication: 
2002
Series/Report no.: 
Staff Report, Federal Reserve Bank of New York 151
Abstract: 
Large differences in national price levels exist across countries. In this paper, I develop a general equilibrium model predicting that these differences should be related to countries' exchange rate regimes. My empirical findings confirm that countries with fixed exchange rate regimes have higher national price levels than countries with flexible regimes. At the disaggregate level, the relationship between exchange rate regimes and national price levels is stronger for nontraded goods than for traded goods. I also find that measuring the misalignment in national price levels around times of regime shifts without considering a break in its equilibrium value results in the overestimation of the true misalignment.
JEL: 
E52
F33
F41
Document Type: 
Working Paper

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