Abstract

http://ssrn.com/abstract=2254664
 
 

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Pass-Through of Trade Costs to U.S. Import Prices


Hakan Yilmazkuday


Florida International University

January 1, 2015

Forthcoming at Review of World Economics

Abstract:     
This paper measures the pass-through of trade costs into U.S. import prices by using actual data on duties/tariffs and freight-related costs. The key innovation is to decompose the indirect effects of trade costs (on prices) into the effects on markups, quality and productivity while measuring/interpreting the pass-through of trade costs into welfare. Robust to the consideration of variable versus constant markups, there is evidence for incomplete pass-through, mostly due to the negative indirect effects of trade costs on marginal costs, suggesting that lower trade costs are associated with imports that have higher marginal costs; markups are affected relatively less. When the effects of trade costs on marginal costs are further decomposed into their components, the positive contribution of quality dominates in all cases, followed by the negative effects of productivity, suggesting that lower trade costs are associated with higher-quality imports that have been produced with lower productivity.

Number of Pages in PDF File: 36

Keywords: Pass-through, Trade Costs, Variable Markups, Quality, Productivity

JEL Classification: F12, F13, F14


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Date posted: April 22, 2013 ; Last revised: January 23, 2015

Suggested Citation

Yilmazkuday, Hakan, Pass-Through of Trade Costs to U.S. Import Prices (January 1, 2015). Forthcoming at Review of World Economics. Available at SSRN: http://ssrn.com/abstract=2254664 or http://dx.doi.org/10.2139/ssrn.2254664

Contact Information

Hakan Yilmazkuday (Contact Author)
Florida International University ( email )
Miami, FL 33199
United States
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References:  20
Citations:  1

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