A discussion around the following point: The demand for Australian exports should depend on export price in foreign currency, but the price index we have is export prices in the Australian currency. As a result, we should expect the price and exchange rate elasticities to be equal (i.e. to foreign buyers of Australian goods it should not matter if the price has gone up because price in Australian dollars has gone up or because Australian dollar has become more expensive), and examine this hypothesis against the alternative that they price and exchange rate elasticities are dierent, at the 5% level of signicance.