Real Exchange Rates and Relative Prices: An Empirical Investigation
Working Paper 4231
DOI 10.3386/w4231
Issue Date
This paper uncovers a striking empirical regularity: the consumer price of a good relative to a different good within a country tends to be much less variable than the price of that good relative to a similar good in another country. This fact seems to hold for all goods except very simple, homogeneous products. Models of real exchange rates are likely to have predictions regarding this relation, so this fact may provide a useful gauge for discriminating among models.
Published Versions
Journal of Monetary Economics, Vol. 32, (August 1993), p. 35-50 citation courtesy of