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Exchange Rates and Prices: Evidence from the 2015 Swiss Franc Appreciation

Auer, Raphael and Burstein, Ariel and Lein, Sarah M.. (2018) Exchange Rates and Prices: Evidence from the 2015 Swiss Franc Appreciation. WWZ Working Papers, 2018 (23). Basel.

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Official URL: https://edoc.unibas.ch/65474/

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Abstract

The removal of the lower bound on the EUR/CHF exchange rate in January 2015 provides a unique setting to study the implications of a large and sudden appreciation in an otherwise stable macroeconomic environment. Using transaction-level data on non-durable goods purchases by Swiss consumers, we measure the response of border and consumer retail prices to the CHF appreciation and how household expenditures responded to these price changes. Consumer prices of imported goods and of competing Swiss-produced goods fell by more in product categories with larger reductions in border prices and a lower share of CHF-invoiced border prices. These price changes resulted in substantial expenditure switching between imported and Swiss-produced goods. While the frequency of import retail price reductions rose in the aftermath of the appreciation, the average size of these price reductions fell (and more so in product categories with larger border price declines and a lower share of CHF-invoiced border prices), contributing to low pass-through into import prices.
Faculties and Departments:06 Faculty of Business and Economics
06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Makroökonomie (Lein)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Moret, Claudia and Lein, Sarah M.
Item Type:Working Paper
Publisher:WWZ
Number of Pages:80
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
Identification Number:
  • handle: RePEc:bsl:wpaper:2018/23
Last Modified:20 Sep 2018 14:26
Deposited On:20 Sep 2018 14:24

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