@techreport{NBERw12861,
 title = "Pricing-to-Market in a Ricardian Model of International Trade",
 author = "Andrew Atkeson and Ariel Burstein",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "12861",
 year = "2007",
 month = "January",
 URL = "http://www.nber.org/papers/w12861",
 abstract = {We study the implications for international relative prices of a simple Ricardian model of international trade with imperfect competition and variable markups, providing a tractable account of firm-level and aggregate prices. We show that both trade costs and imperfect competition with variable markups are needed to account for pricing-to-market at the firm and aggregate levels. We also show that international trade costs are essential, but pricing-to-market is not, to account for a high volatility of tradeable consumer prices relative to the overall CPI-based real-exchange rate.},
}