Border, Border, Wide and Far, How We Wonder What You Are
Border, Border, Wide and Far, How We Wonder What You Are:

November 1999 - Crossing national borders adds significantly to price dispersion. This study of prices in Japan and the United States finds that a substantial part of that border effect is attributable to distance, shipping costs, exchange rates, and relative variability in wages. Parsley and Wei ex...

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Bibliographische Detailangaben
1. Verfasser: Wei, Shang-Jin (VerfasserIn)
Format: Elektronisch E-Book
Sprache:English
Veröffentlicht: Washington, D.C The World Bank 1999
Schlagworte:
Arbitrage
Barriers
Commodity
Consumer Price Index
Currencies and Exchange Rates
Debt Markets
E-Business
Economic Stabilization
Economic Theory and Research
Emerging Markets
Exchange
Exchange Rate
Exchange Rate Movements
Exchange Rates
Finance and Financial Sector Development
Insurance
International Market
International Markets
International Trade
Legal Systems
Local Currencies
Macroeconomic Management
Macroeconomics and Economic Growth
Markets and Market Access
Power Parity
Price
Price Volatility
Prices
Private Sector Development
Purchasing Power
Trade
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Zusammenfassung:November 1999 - Crossing national borders adds significantly to price dispersion. This study of prices in Japan and the United States finds that a substantial part of that border effect is attributable to distance, shipping costs, exchange rates, and relative variability in wages. Parsley and Wei exploit three-dimensional panel data on prices for 27 traded goods, over 88 quarters, across 96 cities in Japan and the United States, to answer several questions: · Does the average exchange rate between countries stray further from zero than that between cities within a country? · Is there any tendency for the average exchange rate to move closer to zero over time? · Does the border narrow over time? · Is there evidence linking changes in the so-called border effect - the extra dispersion in prices between cities in different countries beyond what physical distance could explain - with plausible economic explanations, such as exchange rate variability? The authors present evidence that the intranational real exchange rates are substantially less volatile than the comparable distribution of international relative prices. They also show that an equally weighted average of commodity-level real exchange rates tracks the nominal exchange rate well, suggesting strong evidence of sticky prices. Next they turn to economic explanations for the dynamics of the border effect. Focusing on the dispersion of prices between city pairs, they confirm previous findings that crossing national borders adds significantly to price dispersion. Based on their point estimates, crossing the U.S.-Japan border is equivalent to adding between 2.5 and 13 million miles to the cross-country volatility of relative prices. They infer that distance, exchange rates, shipping costs, and relative variability in wages influence the border effect.
[Fortsetzung 1. Abstract] After those variables are controlled for, the border effect disappears. This paper - a product of Public Economics, Development Research Group - is part of a larger effort in the group to understand international capital flows. The authors may be contacted at david.parsley@owen.vanderbilt.edu or swei@worldbank.org
Beschreibung:Weitere Ausgabe: Wei, Shang-Jin : Border, Border, Wide and Far, How We Wonder What You Are
Beschreibung:1 Online-Ressource (1 online resource (38 p.))
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