TY  - JOUR
AU  - Bergin,Paul R.
AU  - Feenstra,Robert C.
TI  - Pricing to Market, Staggered Contracts, and Real Exchange Rate Persistence
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7026
PY  - 1999
Y2  - March 1999
UR  - http://www.nber.org/papers/w7026
L1  - http://www.nber.org/papers/w7026.pdf
N1  - Author contact info:
Paul Bergin
Department of Economics
University of California, Davis
One Shields Ave.
Davis, CA 95616
Tel: 530/752-8398
Fax: 530/752-9382
E-Mail: prbergin@ucdavis.edu

Robert C. Feenstra
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA  95616
Tel: 530/752-7022
Fax: 530/752-9382
E-Mail: rcfeenstra@ucdavis.edu
AB  - This paper offers an explanation for the persistence observed in real exchange rate movements.  The model combines pricing to market behavior with sticky prices generated by staggered contracts.  A translog preference structure is sued to enhance both features.  The paper finds that openness limits the degree of endogenous persistence.  Nevertheless, the model under reasonable parameter values can replicate the serial correlation of real exchange rate data.  Further, significant exchange rate data.  Further, significant exchange rate volatility can be generated, and this is amplified by the presence of endogenous persistence
ER  -