Reforms and the real exchange rate: The role of pricing-to-market

• 成果类型: Article
• 署名作者: Patureau, Lise; Poilly, Celine
• 署名单位: Universite PSL; Universite Paris-Dauphine; Centre National de la Recherche Scientifique (CNRS); Institut de Recherche pour le Developpement (IRD); Laboratoire dEconomie de Dauphine LEDa; Centre National de la Recherche Scientifique (CNRS); Institut de Recherche pour le Developpement (IRD); Aix-Marseille Universite
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2019.04.005
• 发表日期: 2019
• 页码: 150-168
• 关键词: Exchange rate; Product market deregulation; fiscal reform; Endogenous firm entry; Pricing-to-market; Endogenous markups

摘要

The paper investigates how endogenous markups affect the extent to which policy reforms can influence international competitiveness. In a two-country model where trade costs allow for international market segmentation, we show that endogenous pricing-to-market behavior of firms acts as an important transmission channel of the policies. By strengthening the degree of competition between firms, product market deregulation at home leads to a reduction in domestic markups, which generally leads to an improvement in the international competitiveness of the Home country. Conversely, the power of competitive tax policy to depreciate the real exchange rate is dampened, as domestic firms take the opportunity of the labor tax cut to increase their markups. The variability of markups also affects the normative implications of the reforms. This indicates the importance of taking into account endogenous pricing-to-market behavior when intending to correctly evaluate the overall effects of the reforms. (C) 2019 Elsevier B.V. All rights reserved.