Abstract

http://ssrn.com/abstract=1476860
 
 

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Stickiness, Synchronization, and Exchange Rate Passthrough in Intrafirm Trade Prices


Brent Neiman


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

September 1, 2009

Chicago Booth Research Paper No. 09-40

Abstract:     
About forty percent of all U.S. international trades occurs between related parties, or intrafirm, such as trades between a parent and subsidiary of the same multinational corporation. Using a good-level dataset that distinguishes arm’s length from intrafirm trades, I demonstrate that for the set of differentiated products, intrafim prices are characterized by 1) less stickiness, 2) less synchronization, and 3) greater exchange rate passthrough. These differences emerge in a simulated dynamic model in which input exporters that are integrated, unlike arm’s length exporters, seek to maximize combined manufacturer and distributor profits.

Number of Pages in PDF File: 55

Keywords: intrafirm trade, exchange rate passthrough, price rigidity

JEL Classification: F4, E3

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Date posted: September 23, 2009 ; Last revised: December 19, 2009

Suggested Citation

Neiman, Brent, Stickiness, Synchronization, and Exchange Rate Passthrough in Intrafirm Trade Prices (September 1, 2009). Chicago Booth Research Paper No. 09-40. Available at SSRN: http://ssrn.com/abstract=1476860 or http://dx.doi.org/10.2139/ssrn.1476860

Contact Information

Brent Neiman (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
HOME PAGE: http://faculty.chicagobooth.edu/brent.neiman/index.html
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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