This paper investigates price setting of internationally traded goods.We develop a theoretical model that incorporates sticky prices in the currency of both the buyer (local currency pricing) and seller (producer currency pricing).The nature of price setting is thus forward looking and the...

This paper investigates price setting of internationally traded goods. We develop a theoretical model that incorporates sticky prices in the currency of both the buyer (local currency pricing) and seller (producer currency pricing). The nature of price setting is thus forward looking and the...