Found 43 article(s) for author 'Gita Gopinath'

International Prices and Exchange Rates

International Prices and Exchange Rates. Gita Gopinath, January 2013, Paper. “We survey the recent empirical and theoretical developments in the literature on the relation between prices and exchange rates. After updating some of the major findings in the empirical literature we present a simple framework to interpret this evidence. We review theoretical models that generate insensitivity of prices to exchange rate changes through variable markups, both under flexible prices and nominal rigidities, first in partial equilibrium and then in general equilibrium.” Link

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Trade Prices and the Global Trade Collapse of 2008-09

Trade Prices and the Global Trade Collapse of 2008-09. Gita Gopinath,July 29, 2012, Paper. “We document the behavior of trade prices during the Great Trade Collapse of 2008- 2009 using transaction-level data from the U.S. Bureau of Labor Statistics. First, we find that differentiated manufactures exhibited marked stability in their trade prices during the large decline in their trade volumes. Prices of non-differentiated manufactures, by contrast, declined sharply. Second, while the trade collapse was much steeper among differentiated durable manufacturers than among non-durables, prices in both categories barely changed…” Link

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International Prices and Exchange Rates

International Prices and Exchange Rates. Gita Gopinath, 2012, Paper. “Milton Friedman advocated flexible exchange rates on the premise that they would allow the relative prices of domestic and foreign goods to adjust in a world with nominal rigidities. The strength of his argument, and its implications for monetary and exchange rate policy, depend crucially on the specifics of nominal rigidity: How rigid are prices? Are prices fixed in the producer’s currency or in the local currency? When prices adjust, how much do they respond to exchange rate shocks?” Link

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EconomicDynamics Interviews Gita Gopinath on Sovereign Default

EconomicDynamics Interviews Gita Gopinath on Sovereign Default. Gita Gopinath, November 2011, Opinion. “The interaction between high public debt and the inability to devalue has come up frequently in discussions of the Euro crisis. However, there is an important distinction to be made. There are two channels through which a currency devaluation can help a government repay its debt: One, by reducing the real value of the debt owed and two by stimulating the economy through adjustments of the terms of trade and therefore raising primary fiscal surpluses for the government. The first channel is relevant to the extent that the debt is…” Link

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International Prices, Costs and Mark-up differences

International Prices, Costs and Mark-up differences. Gita Gopinath, August 17, 2010, Paper. “Relative cross-border retail prices, in a common currency, co-moves closely with the nominal exchange rate. Using a data set with product level retail prices and wholesale costs for a large grocery chain operating in the U.S. and Canada, we decompose this variation into relative wholesale costs and relative markup components. We find that the correlation of the nominal exchange rate with the real exchange rate is mainly driven by changes in relative wholesale costs, arguably the most tradable component of a retailer’s costs…” Link

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In Search of Real Rigidities

In Search of Real Rigidities. Gita Gopinath, April 1, 2010, Paper. “The closed and open economy literatures work on estimating real rigidities, but in parallel. We bring the two literatures together to shed light on this question. We use international price data and exchange rate shocks to evaluate the importance of real rigidities in price setting. We show that consistent with the presence of real rigidities the response of reset-price inflation to exchange rate shocks depicts significant persistence. Individual import prices, conditional on changing, respond to exchange rate shocks prior to the last price change. At the same time aggregate reset-price inflation for imports…” Link

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Currency Choice and Exchange Rate Pass-through

Currency Choice and Exchange Rate Pass-through. Gopinath, Gita, Oleg Itskhoki, and Roberto Rigobon, 2010, Paper. “We show, using novel data on currency and prices for US imports, that even conditional on a price change, there is a large difference in the exchange rate pass-through of the average good priced in dollars (25 percent) versus nondollars (95 percent). We document this to be the case across countries and within disaggregated sectors. This finding contradicts the assumption in an important class of models that the currency of pricing is exogenous. We present a model of endogenous currency choice in a dynamic price…” Link

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Frequency of Price Adjustment and Pass-through

Frequency of Price Adjustment and Pass-through. Gopinath, Gita, and Oleg Itskhoki. 2010, Paper. “We empirically document using U.S. import prices that on average goods with a high frequency of price adjustment have a long-run pass-through that is at least twice as high as that of low-frequency adjusters. We show theoretically that this relationship should follow because variable mark-ups that reduce long-run pass-through also reduce the curvature of the profit function when expressed as a function of the cost shocks, making the firm less willing to adjust its price. Lastly, we quantitatively evaluate a dynamic menu-cost…” Link

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Investment Cycles and Sovereign Debt Overhang

Investment Cycles and Sovereign Debt Overhang. Aguiar, Mark, Manuel Amador, and Gita Gopinath, 2009, Paper. “We characterize optimal taxation of foreign capital and optimal sovereign debt policy in a small open economy where the government cannot commit to policy, seeks to insure a risk-averse domestic constituency, and is more impatient than the market. Optimal policy generates long-run cycles in both sovereign debt and foreign direct investment in an environment in which the first best capital stock is a constant. The expected tax on capital endogenously varies with the state of the economy, and investment is distorted…” Link


Expropriation Dynamics

Expropriation Dynamics. Aguiar, Mark, Manuel Amador, and Gita Gopinath. 2009, Paper. “Many emerging market economies oscillate between periods of high and low growth (see Aguiar and Gopinath 2007). These changes in growth regimes generate business cycles that are markedly different from the ones observed in developed countries: consumption and investment are volatile relative to output, and net exports are strongly countercyclical. This volatility is often accompanied by sharp changes in the policy environment as well. For example, Figure 1 shows the relationship between two measures of expropriation…” Link