Exchange Rates and Prices: Evidence from the 2015 Swiss Franc Appreciation
American Economic Review
vol. 111,
no. 2, February 2021
(pp. 652-86)
Abstract
We dissect the impact of a large and sudden exchange rate appreciation on Swiss border import prices, retail prices, and consumer expenditures on domestic and imported nondurable goods, following the removal of the EUR/CHF floor in January 2015. Cross-sectional variation in border price changes by currency of invoicing carries over to consumer prices and allocations, impacting retail prices of imports and competing domestic goods, as well as import expenditures. We provide measures of the sensitivity of retail import prices to border prices and the sensitivity of import shares to relative prices, which is higher when using retail prices than border prices.Citation
Auer, Raphael, Ariel Burstein, and Sarah M. Lein. 2021. "Exchange Rates and Prices: Evidence from the 2015 Swiss Franc Appreciation." American Economic Review, 111 (2): 652-86. DOI: 10.1257/aer.20181415Additional Materials
JEL Classification
- E21 Macroeconomics: Consumption; Saving; Wealth
- E31 Price Level; Inflation; Deflation
- F14 Empirical Studies of Trade
- F31 Foreign Exchange
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms