Empirical essays on vertical contracts, exchange rates, and monetary policy

This work consists of two parts. The first part explores three aspects of the relationship between vertical contracts and exchange rates. The first chapter proposes a new structural method to estimate exchange-rate pass-though. Counterfactual experiments quantify the effect of an exchange-rate shock on domestic and foreign firms' profits and on domestic consumer welfare. The chapter provides evidence that foreign manufacturers bear more of the burden of such a shock than do domestic consumers, domestic manufacturers, or the domestic retailer. The second chapter explores the relationship between various vertical contracts and exchange-rate pass-through in counterfactual experiments. The third chapter considers the merits of the counterfactual estimation of pass-through relative to more traditional estimation techniques. The second part of this work considers electoral cycles in the instruments of monetary policy. Chapter four presents some evidence that U.S. monetary instruments may have passively accommodated an active electoral cycle in fiscal policy in the post-1972 era.