DP4290 | Investment Prices and Exchange Rates: Some Basic Facts

Publication Date

23/03/2004

JEL Code(s)

Keyword(s)

Programme Area(s)

Network(s)

Abstract

This Paper documents four basic facts about investment goods and investment prices. First, investment has a very significant non-tradable component in the form of construction services. Second, distributions services (wholesaling, retailing, and transportation) are much less important for investment than for consumption. Third, the import content of investment is much larger than that of consumption. Finally, in the aftermath of three large devaluations, the rate of exchange rate pass-through is, perhaps not surprisingly, highest for imported equipment and lowest for construction services.