Citation

Discussion Paper Details

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Title: Investment Prices and Exchange Rates: Some Basic Facts

Author(s): Ariel Tomas Burstein, Joao C Neves and Sérgio Rebelo

Publication Date: March 2004

Keyword(s): construction, investment, nominal exchange rate, prices and real exchange rate

Programme Area(s): International Macroeconomics

Abstract: This Paper documents four basic facts about investment goods and investment prices. First, investment has a very significant non-tradable component in the form of construction services. Second, distributions services (wholesaling, retailing, and transportation) are much less important for investment than for consumption. Third, the import content of investment is much larger than that of consumption. Finally, in the aftermath of three large devaluations, the rate of exchange rate pass-through is, perhaps not surprisingly, highest for imported equipment and lowest for construction services.

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Bibliographic Reference

Burstein, A, Neves, J and Rebelo, S. 2004. 'Investment Prices and Exchange Rates: Some Basic Facts'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4290