International monetary trade and the law of one price

• 成果类型: Article; Proceedings Paper
• 署名作者: Camera, G; Winkler, J
• 署名单位: Purdue University System; Purdue University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2003.08.002
• 发表日期: 2003
• 页码: 1531-1553
• 关键词: International trade; money; price posting; search

摘要

We endogenize circulation of currencies and price formation in a decentralized trading environment with two countries and two currencies. In equilibrium sellers of homogeneous goods may post prices in the national or also in the foreign currency, given unobservable buyers' valuations. We prove that, under different monetary regimes, the absence of well integrated international goods markets doesn't necessarily imply a violation of the law of one price. We also illustrate the behavior of prices across regimes characterized by different degrees of monetary integration. (C) 2003 Elsevier B.V. All rights reserved.