TY  - JOUR
AU  - Atkeson,Andrew
AU  - Burstein,Ariel
TI  - Pricing-to-Market in a Ricardian Model of International Trade
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12861
PY  - 2007
Y2  - January 2007
UR  - http://www.nber.org/papers/w12861
L1  - http://www.nber.org/papers/w12861.pdf
N1  - Author contact info:
Andrew Atkeson
Bunche Hall 9381
Department of Economics
UCLA
Box 951477
Los Angeles, CA  90095-1477
Tel: 866/312-9770
Fax: 310/825-9528
E-Mail: andy@atkeson.net

Ariel Burstein
Department of Economics
Bunche Hall 8365
Box 951477
UCLA
Los Angeles, CA 90095-1477
Tel: 310/206-6732
Fax: 310/825-9528
E-Mail: arielb@econ.ucla.edu
AB  - 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.
ER  -