Investment Prices and Exchange Rates: Some Basic Facts

Ariel Burstein, Joao C. Neves, Sergio Rebelo

NBER Working Paper No. 10238
Issued in January 2004
NBER Program(s):Economic Fluctuations and Growth Program, International Finance and Macroeconomics Program

This paper documents four basic facts about investment goods and investment prices. First, investment has a very significant nontradable component in the form of construction services. Second, distributions services (wholesaling, retailing, and transportation) are much less important for investment than for consumption. Third, the import content of investment is much larger than that of consumption. Finally, in the aftermath of three large devaluations, the rate of exchange rate pass-through is, perhaps not surprisingly, highest for imported equipment and lowest for construction services.

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Document Object Identifier (DOI): 10.3386/w10238

Published: Ariel T. Burstein & João C. Neves & Sergio Rebelo, 2004. "Investment Prices and Exchange Rates: Some Basic Facts," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 302-309, 04/05. citation courtesy of

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