Devereux, Michael B.; Engel, Charles; Storgaard, Peter E. - 2021
, where both pass-through and the exchange rate are simultaneously determined, and interact with one another. Pass-through is … endogenous because firms choose the currency in which they set their export prices. There is a unique equilibrium rate of pass-through … under the condition that exchange rate volatility rises as the degree of pass-through falls. We show that the relationship …