Alexis Antoniades

LOCAL VERSUS PRODUCER CURRENCY PRICING: EVIDENCE FROM DISAGGREGATED DATA

The pricing behavior of firms is a central issue in international macroeconomics. Using the introduction of the euro as a natural experiment I find that year‐to‐year volatility in import prices among Eurozone members diminished by 4% on average after the introduction of the euro. Additionally, I show that the magnitude of the drop was commensurate with the drop in exchange rate volatility. On the other hand, when looking at exports, I find that the introduction of the euro had no impact on export price volatility. The results support the hypothesis of producer currency pricing.

EXCHANGE RATE PASS‐THROUGH INTO RETAIL PRICES

We study exchange rate pass‐through and its determinants using scanner data on fast moving consumer goods sold by 1,041 outlets in the United Arab Emirates between 2006 and 2010. The data are augmented with country of origin information. Our main finding is that exchange rate pass‐through varies more across retailers within regions than across regions, and in particular that pass‐through increases with retailer market share. We also find that exchange rate pass‐through is negatively correlated with both product quality and the elasticity of substitution of the product category and positively correlated with the frequency of price adjustment.

What is the Price of Tea in China? Towards the Relative Cost of Living in Chinese and U.S. Cities

We examine the price and variety of products at the barcode level in cities within China and the United States. In both countries, there is a greater variety of products in larger cities. But in China, unlike the United States, the prices of products tend to be lower in larger cities. We attribute the lower prices to a pro-competitive effect, whereby large cities attract more firms which leads to lower markups and prices. Combining the effect of greater variety and lower prices, it follows that the cost of living for grocery-store products in China is lower in larger cities. We further compare the cost-of-living indexes for particular product categories between China and the United States. In product categories with a significant presence of U.S. brands in the Chinese market, the availability of additional Chinese brands leads to greater variety than in the United States, and therefore lower Chinese price indexes for that reason. In product categories with much less presence of U.S. brands in the Chinese market, however, the observed prices differences between the countries (usually lower prices in China) are partially or fully offset by the variety differences (less variety in China), so that the cost of living in China is not as low as the price differences suggest, especially in smaller cities.