Add to ORKGWe argue that even in perfectly frictionless markets risk aversion driven by exchange rate uncertainty may cause a wedge between the domestic and foreign price of a totally homogeneous good. We test our hypothesis using a natural experiment based on a unique micro-data set from a market with minimum imperfections. The empirical findings validate our hypothesis, as accounting for exchange rate uncertainty we are able to explain a substantial proportion of deviations from the law of one price. Overall, our analysis suggests the possibility of a new solution to the purchasing power parity puzzles
This is a post-peer-review, pre-copyedit version of an article published in Open Economic Reviews. T...
Exchange-rate economics is filled with puzzles. The asset approach has failed. Purchasing Power Pari...
The Purchasing Power Parity (PPP) hypothesis predicts that exchange rates are determined by the purc...
We argue that even in perfectly frictionless markets risk aversion driven by exchange rate uncertain...
We argue that risk aversion driven by exchange-rate uncertainty causes a wedge between the domestic ...
We argue that risk aversion driven by exchange-rate uncertainty causes a wedge between the domestic ...
Arghyrou, Gregoriou and Pourpourides (2009) argue that exchange rate uncertainty causes deviations f...
Arghyrou, Gregoriou and Pourpourides (2009) argue that exchange rate uncertainty causes deviations f...
This paper analyzes the role of goods market frictions in accounting for the large and volatile devi...
Using self-exciting threshold autoregressive models, we explore the validity of the law of one price...
The purchasing power parity puzzle is among the central issues of international macroeconomics. In m...
Exchange-rate economics is filled with puzzles. The asset approach has failed and without it most o...
This is a post-peer-review, pre-copyedit version of an article published in Open Economic Reviews. T...
Exchange-rate economics is filled with puzzles. The asset approach has failed. Purchasing Power Pari...
The Purchasing Power Parity (PPP) hypothesis predicts that exchange rates are determined by the purc...
We argue that even in perfectly frictionless markets risk aversion driven by exchange rate uncertain...
We argue that risk aversion driven by exchange-rate uncertainty causes a wedge between the domestic ...
We argue that risk aversion driven by exchange-rate uncertainty causes a wedge between the domestic ...
Arghyrou, Gregoriou and Pourpourides (2009) argue that exchange rate uncertainty causes deviations f...
Arghyrou, Gregoriou and Pourpourides (2009) argue that exchange rate uncertainty causes deviations f...
This paper analyzes the role of goods market frictions in accounting for the large and volatile devi...
Using self-exciting threshold autoregressive models, we explore the validity of the law of one price...
The purchasing power parity puzzle is among the central issues of international macroeconomics. In m...
Exchange-rate economics is filled with puzzles. The asset approach has failed and without it most o...
This is a post-peer-review, pre-copyedit version of an article published in Open Economic Reviews. T...
Exchange-rate economics is filled with puzzles. The asset approach has failed. Purchasing Power Pari...
The Purchasing Power Parity (PPP) hypothesis predicts that exchange rates are determined by the purc...