We study good-by-good deviations from the Law-of-One-Price for over 1,800 retail goods and services between all European Union (EU) countries for the years 1975, 1980, 1985 and 1990. We find that for each of these years, after we control for differences in income and value-added tax rates, there...

Using cross-sectional data on local currency prices of over 1,800 retail goods and services across 13 European countries in the mid 1980's, we characterize the behavior of average relative prices -- `real exchange rates' -- as well as dispersion around these averages. We find that the averages...

In this paper we revisit the issues addressed in Crucini and Kahn (1996) in the light of recent research on the Great Depression. In that paper we had argued that particular features of the Hawley-Smoot tariffs could have provided them with a stronger impact than conventional wisdom had held,...

We examine the driving forces of G-7 business cycles. We decompose national business cycles into common and nation-specific components using a dynamic factor model. We also do this for driving variables found in business cycle models: productivity; measures of fiscal and monetary policy; the...

We study the dynamics of good-by-good real exchange rates using a micro-panel of 270 goods prices drawn from major cities in 63 countries and 258 goods prices drawn from 13 major U.S. cities. We find the half-life of deviations from the Law-of-One-Price for the average good is about 1 year. The...

This paper is a non-technical review of research developments in the international real business cycle literature. International business cycle facts are summarize with particular attention to the sources of output variance from the expenditure side of the NIPA and the production side, using a...

We study the dynamics of good-by-good real exchange rates using a micro-panel of 270 goods prices drawn from major cities in 71 countries and 245 goods prices drawn from 13 major U.S. cities. We find half-lives of deviations from the Law-of-One-Price for the average good is about 1 year;...

Volatile and persistent real exchange rates are observed not only in aggregate series but also in the individual good level data. Kehoe and Midrigan (2007) recently showed that, under a standard assumption on nominal price stickiness, empirical frequencies of micro-price adjustment cannot...

We introduce the real exchange rate volatility curve as a useful device to understand the relationship between price stickiness and the fluctuations in Law of One Price deviations. In the presence of both nominal and real shocks, the theory predicts that the real exchange rate volatility curve...

Cole and Obstfeld (1991) exposited a classic result where equilibrium movements in the terms of trade could make ex ante risk-sharing arrangements unnecessary: a unity elasticity of substitution across goods and production specialization. This paper extends their model to N countries and M...