Investment Prices and Exchange Rates: Some Basic Facts

11 Pages Posted: 31 Jan 2004 Last revised: 24 Dec 2015

See all articles by Ariel T. Burstein

Ariel T. Burstein

University of California, Los Angeles (UCLA) - Department of Economics

Joao C. Neves

Catholic University of Portugal (UCP) - Faculty of Economic Science and Business Studies

Sergio T. Rebelo

Northwestern University - Kellogg School of Management; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

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Date Written: January 2004

Abstract

This paper documents four basic facts about investment goods and investment prices. First, investment has a very significant nontradable 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.

Suggested Citation

Burstein, Ariel T. and das Neves, João Luís César and Tavares Rebelo, Sergio, Investment Prices and Exchange Rates: Some Basic Facts (January 2004). NBER Working Paper No. w10238. Available at SSRN: https://ssrn.com/abstract=492351

Ariel T. Burstein

University of California, Los Angeles (UCLA) - Department of Economics ( email )

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João Luís César Das Neves

Catholic University of Portugal (UCP) - Faculty of Economic Science and Business Studies ( email )

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Sergio Tavares Rebelo (Contact Author)

Northwestern University - Kellogg School of Management ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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