Search results with tag "Pricing to habits"

Pricing to Habits and the Law of One Price

Under pricing to habits, an expansionary domestic demand shock induces a decline in prices in the domestic country but not abroad, leading to a departure from the law of one price. In addition, the pricing-to-habit mecha-nism gives rise to two important predictions. Namely, in response to a …

  Pricing, Habits, The law of one, Pricing to habits