The DOI matches its Crossref record; 11 of the 11 references it cites were found in a registry or an index.
Hysteresis, Import Penetration, and Exchange Rate Pass-Through
Abstract
A competitive industry has established home firms, and foreign firms with entry and exit costs. The real exchange rate follows a Brownian motion. Industry equilibrium is determined using methods of option pricing. Entry requires the operating profit to exceed the interest on the entry cost, and similarly for exit. The middle band of rates without entry or exit yields hysteresis; it is found to be very wide for plausible parameter values. The exchange rate pass-through to domestic prices is found to be close to one in the phases where foreign firms enter or exit, and near zero otherwise.
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Citations
Cites
Theory of rational option pricing
Merton, R. C. (2005) · Theory of Valuation · doi:10.1142/9789812701022_0008 · Cited by 7,161
Selection and the Evolution of Industry
Jovanovic, B. (1982) · Econometrica · doi:10.2307/1912606 · Cited by 4,515
Evaluating Natural Resource Investments
Brennan, M. J., & Schwartz, E. S. (1985) · The Journal of Business · doi:10.1086/296288 · Cited by 2,374
Entry and Exit Decisions under Uncertainty
Dixit, A. (1989) · Journal of Political Economy · doi:10.1086/261619 · Cited by 2,341
Self-citationFiring Costs and Labour Demand: How Bad is Eurosclerosis?
Bentolila, S., & Bertola, G. (1990) · The Review of Economic Studies · doi:10.2307/2298020 · Cited by 1,371
Persistent Trade Effects of Large Exchange Rate Shocks
Baldwin, R., & Krugman, P. (1989) · The Quarterly Journal of Economics · doi:10.2307/2937860 · Cited by 934
Lucas, R. E., & Prescott, E. C. (1971) · Econometrica · doi:10.2307/1909571 · Cited by 928
Time to build, option value, and investment decisions
Majd, S., & Pindyck, R. S. (1987) · Journal of Financial Economics · doi:10.1016/0304-405x(87)90059-6 · Cited by 902
Equilibrium search and unemployment
Lucas, R. E., & Prescott, E. C. (1974) · Journal of Economic Theory · doi:10.1016/0022-0531(74)90106-9 · Cited by 677
Ploeg, F. V. D., & Krugman, P. R. (1990) · The Economic Journal · doi:10.2307/2233630 · Cited by 453
Cited by
Entry and Exit Decisions under Uncertainty
Dixit, A. (1989) · Journal of Political Economy · doi:10.1086/261619 · Cited by 2,341
Self-citationMarkov-Perfect Industry Dynamics: A Framework for Empirical Work
Ericson, R., & Pakes, A. (1995) · The Review of Economic Studies · doi:10.2307/2297841 · Cited by 2,325
Bernard, A. B., & Jensen, J. B. (2004) · Review of Economics and Statistics · doi:10.1162/003465304323031111 · Cited by 1,591
Persistence of power, Elites, and institutions
Acemoglu, D., & Robinson, J. A. (2008) · American Economic Review · doi:10.1257/aer.98.1.267 · Cited by 1,268
Operating Flexibility, Global Manufacturing, and the Option Value of a Multinational Network
Kogut, B., & Kulatilaka, N. (1994) · Management Science · doi:10.1287/mnsc.40.1.123 · Cited by 1,131
Metadata
- Authors
- Dixit, A.
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 1989-05
- Volume
- 104
- Issue
- 2
- Pages
- 205
- ISSN
- 0033-5533 (ISSN-L)
- OpenAlex
- W2059384635
- Cited by
- 870
- References
- 11
- FWCI
- 84.97
- Type
- journal article
- Language
- en
- Open access
- closed
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
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