TY  - GEN
Y1  - 2014/06//
UR  - https://archiv.ub.uni-heidelberg.de/volltextserver/17061/
A1  - Buzaushina, Almira 
A1  - Enders, Zeno
A1  - Hoffmann, Mathias 
KW  - Exchange rate pass-through
KW  -  ?nancial integration
KW  - portfolio home bias
KW  -  international price setting
AV  - public
ID  - heidok17061
TI  - International Financial Market Integration, Asset Compositions
and the Falling Exchange Rate Pass-Through
EP  - 37
CY  - Heidelberg
N2  - This paper provides an explanation for the observed decline of the exchange rate pass-through into import prices by modeling the effects of ?nancial market integration on the optimal choice of the pricing currency in the context of rigid nominal goods prices. Contrary to previous literature,
the interdependence of this choice with the optimal portfolio choice of internationally traded ?nancial assets is explicitly taken into account. In particular, price setters move towards more local-currency pricing while the debt portfolio includes more foreign assets following increased ?nancial integration. Both predictions are in line with novel empirical evidence.
T3  - Discussion Paper Series, University of Heidelberg, Department of Economics
ER  -