Dr Chen featured in The Financial Times discussing exchange-rate movementsFriday 13 Mar 2015
Dr Natalie Chen recently featured in an article in The Financial Times entitled "Rich economies question faith in power of lower exchange rates".
The article discusses how policy makers in some of the world’s largest economies are turning to currency devaluation in the hope this will trigger an export-led recovery. It made reference to a previous column by Dr Chen on exchange-rate movements, written with Luciana Juvenal from the Institute for Capacity Development (IMF), that was featured on Voxeu; a research-based policy analysis and commentary website written by leading economists.
In the column, Dr Chen, shows that companies producing high-quality goods are also reluctant to cut prices abroad in the wake of devaluation:
“If exchange-rate movements are more strongly absorbed into the export prices of higher quality goods, . . . exchange-rate fluctuations have a less than proportional impact on aggregate trade prices and volumes.”
View the full Voxeu column; “The prices of higher quality goods respond less to exchange-rate movements”.