Exchange rates and the prices of manufacturing products imported into the United States
AbstractLocal-currency prices of foreign products do not usually respond one-for-one to changes in the exchange rate. The extent and pervasiveness of this incomplete "pass-through" of exchange rates to import prices has long been debated. Yet, despite the abundance of empirical research on the relationship between exchange rates and import prices, there is little systematic evidence on the time-series dimension of pass-through that encompasses the most recent years. ; In this article, the author provides some updated estimates of the responsiveness of U.S. import prices to changes in the exchange rate in a sample of manufacturing industries over the period 1981 to 1999. Passthrough is generally incomplete, but there is a considerable degree of variation across different industries. The author also documents a decline in pass-through for the majority of examined industries in the most recent decade. While pass-through was 0.50 on average in the 1980s, it dropped to an average of about 0.25 in the 1990s. Thus, during the 1990s larger changes in the exchange rate were needed to move the dollar price of imported goods relative to the price of domestic goods. As with other studies, the author finds that it is difficult to relate the change in passthrough to macroeconomic outcomes such as the lower inflation rates achieved in many countries.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Federal Reserve Bank of Boston in its journal New England Economic Review.
Volume (Year): (2002)
Issue (Month): Q 1 ()
Pages: 3 - 18
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert W. Rich & Donald Rissmiller, 2000. "Understanding the recent behavior of U.S. inflation," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 6(Jul).
- Feenstra, Robert C., 1989.
"Symmetric pass-through of tariffs and exchange rates under imperfect competition: An empirical test,"
Journal of International Economics,
Elsevier, vol. 27(1-2), pages 25-45, August.
- Robert C. Feenstra, 1987. "Symmetric Pass-Through of Tariffs and Exchange Rates Under Imperfect Competition: An Empirical Test," NBER Working Papers 2453, National Bureau of Economic Research, Inc.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977.
"Monopolistic Competition and Optimum Product Diversity,"
American Economic Review,
American Economic Association, vol. 67(3), pages 297-308, June.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
- Taylor, John B., 2000. "Low inflation, pass-through, and the pricing power of firms," European Economic Review, Elsevier, vol. 44(7), pages 1389-1408, June.
- Jonathan McCarthy, 2000.
"Pass-through of exchange rates and import prices to domestic inflation in some industrialized economies,"
111, Federal Reserve Bank of New York.
- Jonathan McCarthy, 2007. "Pass-Through of Exchange Rates and Import Prices to Domestic Inflation in Some Industrialized Economies," Eastern Economic Journal, Eastern Economic Association, vol. 33(4), pages 511-537, Fall.
- J. McCarthy, 1999. "Pass-through of exchange rates and import prices to domestic inflation in some industrialised economies," BIS Working Papers 79, Bank for International Settlements.
- Jose Manuel Campa & Linda S. Goldberg, 2002.
"Exchange Rate Pass-Through into Import Prices: A Macro or Micro Phenomenon?,"
NBER Working Papers
8934, National Bureau of Economic Research, Inc.
- Campa, Jose M. & Goldberg, Linda S., 2002. "Exchange rate pass-through into import prices: A macro or micro phenomenon?," IESE Research Papers D/475, IESE Business School.
- Jose Manuel Campa & Linda S. Goldberg, 2002. "Exchange rate pass-through into import prices: a macro or micro phenomenon?," Staff Reports 149, Federal Reserve Bank of New York.
- Subramanian Rangan & Robert Z. Lawrence, 1999. "Search and Deliberation in International Exchange: Learning from Multinational Trade About Lags, Distance Effects, and Home Bias," NBER Working Papers 7012, National Bureau of Economic Research, Inc.
- Kenneth A. Froot & Paul Klemperer, 1989.
"Exchange Rate Pass-Through When Market Share Matters,"
NBER Working Papers
2542, National Bureau of Economic Research, Inc.
- Froot, Kenneth A & Klemperer, Paul D, 1989. "Exchange Rate Pass-Through When Market Share Matters," American Economic Review, American Economic Association, vol. 79(4), pages 637-54, September.
- José Manuel Campa & Linda S. Goldberg, 2005.
"Exchange Rate Pass-Through into Import Prices,"
The Review of Economics and Statistics,
MIT Press, vol. 87(4), pages 679-690, November.
- Pinelopi K. Goldberg & Michael M. Knetter, 1996.
"Goods Prices and Exchange Rates: What Have We Learned?,"
NBER Working Papers
5862, National Bureau of Economic Research, Inc.
- Pinelopi Koujianou Goldberg & Michael M. Knetter, 1997. "Goods Prices and Exchange Rates: What Have We Learned?," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1243-1272, September.
- Joseph E. Gagnon & Jane Ihrig, 2001. "Monetary policy and exchange rate pass-through," International Finance Discussion Papers 704, Board of Governors of the Federal Reserve System (U.S.).
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Catherine Spozio).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.