Price determination in Ireland - effects of changes in exchange-rates and exchange-rate regimes

Abstract

This paper finds that the wholesale price of Irish manufacturing output is closely tied to foreign prices in the long run; domestic wage costs generally do not exert a significant influence. In the short run changes in foreign currency prices affect Irish prices more rapidly than do changes in exchange rates. There is evidence of a change in pricing behaviour on Ireland's entry into the EMS. German output prices are now as important as UK prices in determining Irish prices.