English, Article, Journal or magazine article edition: Price Behavior in Japanese and U.S. Manufacturing Richard C. Marston

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Bookmark: http://trove.nla.gov.au/version/140658
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Price Behavior in Japanese and U.S. Manufacturing
Author
  • Richard C. Marston
Physical Description
  • preprint
Notes
  • Relative price changes in Japanese and U.S. manufacturing are driven by two forces, productiviry growrh which leads to secular changes in costs and exchange rate fluctuations which change relative prices between the two countries. In sectors where productivity growth is high, reductions in costs can neutralize exchange rate appreciations to keep prices competitive with those abroad, at least in the long run, But even in these sectors, exchange rate fluctuations are the dominant influence on relative competitiveness in the short run. Faced with swings in exchange rates, firms adopt defensive measures to defend their export markets. The paper presents estimates of "pricing to market" elasticities which suggest that firms lower their export prices in domestic currency relative to their domestic prices in order to limit the effects of currency appreciations. There is evidence that firms in both countries pursue such pricing strategies, but pricing to market is more extensive in Japan. In response to a appreciation of the yen, Japanese firms reduce their export prices in yen sharply so as to limit the pass-through of the appreciation into the dollar prices of their exports.
  • RePEc:nbr:nberwo:3364
Language
  • English
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