Skip to content

Research at St Andrews

Local currency pricing, foreign monetary shocks and exchange rate policy

Research output: Contribution to journalArticlepeer-review

Author(s)

School/Research organisations

Abstract

The implications of local currency pricing (LCP) for monetary regime choice are analysed for a country facing foreign monetary shocks. In this analysis expenditure switching is potentially welfare reducing. This contrasts with the existing LCP literature, which focuses on productivity shocks and thus analyses a world where expenditure switching is welfare enhancing. This paper shows that, when home and foreign producers follow LCP, expenditure switching is absent and a floating rate is preferred by the home country. But when only home producers follow LCP, expenditure switching is present and a fixed rate can be welfare enhancing for the home country.
Close

Details

Original languageEnglish
Pages (from-to)633-661
JournalOpen Economies Review
Volume26
Issue number4
Early online date17 May 2015
DOIs
Publication statusPublished - 1 Sep 2015

    Research areas

  • Monetary policy, Foreign monetary shocks, Expenditure switching, Exchange rates, Local currency pricing, Reference currency

Discover related content
Find related publications, people, projects and more using interactive charts.

View graph of relations

Related by author

  1. Optimal monetary policy, exchange rate misalignments and incomplete financial markets

    Senay, O. & Sutherland, A. J., Mar 2019, In: Journal of International Economics. 117, p. 196-208 13 p.

    Research output: Contribution to journalArticlepeer-review

  2. Country Portfolios, collateral constraints and optimal monetary policy

    Senay, O. & Sutherland, A. J., 29 Jan 2016, St Andrews: University of St Andrews, p. 1-32, 32 p. (School of Economics & Finance Discussion Paper ; no. 1604).

    Research output: Working paperDiscussion paper

  3. Endogenous price flexibility and optimal monetary policy

    Senay, O. & Sutherland, A., Oct 2014, In: Oxford Economic Papers. 66, 4, p. 1121-1144 24 p.

    Research output: Contribution to journalArticlepeer-review

  4. Nominal Stability and Financial Globalization

    Devereux, M. B., Senay, O. & Sutherland, A., Aug 2014, In: Journal of Money, Credit and Banking. 46, 5, p. 921-959 39 p.

    Research output: Contribution to journalArticlepeer-review

  5. The timing of asset trade and optimal policy in dynamic open economies

    Senay, O. & Sutherland, A., Dec 2013, In: Macroeconomic Dynamics. 17, 8, p. 1543-1573 31 p.

    Research output: Contribution to journalArticlepeer-review

Related by journal

  1. Open Economies Review (Journal)

    Andrew Hughes Hallett (Editor)

    2000 → …

    Activity: Publication peer-review and editorial work typesEditor of research journal

Related by journal

  1. Government revenue and child and maternal mortality

    Hall, S., Illian, J., Makuta, I., McNabb, K., Murray, S. W., O'Hare, B. A-M., Python, A., Zaidi, S. H. A. & Bar-Zeev, N., 12 Sep 2020, (E-pub ahead of print) In: Open Economies Review. First Online, 17 p.

    Research output: Contribution to journalArticlepeer-review

  2. Are international fund flows related to exchange rate dynamics?

    Li, S., de Haan, J. & Scholtens, B., Feb 2018, In: Open Economies Review. 29, 1, p. 31-48 18 p.

    Research output: Contribution to journalArticlepeer-review

  3. Leading indicators of currency crises: Are they the same in different exchange rate regimes?

    Zhao, Y., de Haan, J., Scholtens, B. & Yang, H., 1 Nov 2014, In: Open Economies Review. 25, 5, p. 937-957 21 p.

    Research output: Contribution to journalArticlepeer-review

  4. External imbalances and fiscal fragility in the Euro area

    Alessandrini, P., Fratianni, M., Hughes Hallett, A. & Presbitero, A. F., Feb 2014, In: Open Economies Review. 25, 1, p. 3-34 32 p.

    Research output: Contribution to journalArticlepeer-review

ID: 186666174

Top