Citation

Discussion Paper Details

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Title: Exchange Rates and Prices: Evidence from the 2015 Swiss Franc Appreciation

Author(s): Raphael Auer, Ariel Tomas Burstein and Sarah Lein

Publication Date: October 2020

Keyword(s): exchange rate pass-through, Expenditure Switching, invoicing currency, large exchange rate shock, nominal rigidities and Optimal price-setting

Programme Area(s): International Macroeconomics and Finance, International Trade and Regional Economics and Monetary Economics and Fluctuations

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 non-durable 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.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15397

Bibliographic Reference

Auer, R, Burstein, A and Lein, S. 2020. 'Exchange Rates and Prices: Evidence from the 2015 Swiss Franc Appreciation'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15397