Have U.S. Import Prices Become Less Responsive to Changes in the Dollar?
7 Pages Posted: 3 Oct 2006 Last revised: 4 Apr 2013
Abstract
The failure of the dollar's depreciation to narrow the U.S. trade deficit has driven recent research showing that the transmission of exchange rate changes to import prices has declined sharply in industrial countries. Estimates presented in this study, however, suggest that "pass-through" to U.S. import prices has fallen only modestly, if at all, in the last decade. The authors argue that methodological changes in the collection of import data and the inclusion of commodity prices in pass-through models may have contributed to earlier findings of low pass-through rates.
Keywords: exchange rate, import prices, pricing to market, pass-through, trade deficit, market power
JEL Classification: F3, F4
Suggested Citation: Suggested Citation
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