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Shipping Cost Shocks and US Producer Prices: Normal versus Crisis Pass-through

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Abstract

This paper examines how fluctuations in shipping costs pass through to U.S. producer prices. We link confidential shipment-level import transactions from the Census Bureau's Longitudinal Firm Trade Transactions Database (LFTTD) to confidential firm-level producer prices from the Bureau of Labor Statistics' Producer Price Index (PPI) microdata, constructing a monthly panel of more than 6,000 U.S. manufacturing importers from 2005 to 2022. Using local projections and Bartik-style instruments based on route-level shipping-cost variation, we find that pass-through to domestic producer prices is negligible in "normal" times but rose sharply during the COVID-19 pandemic, a period when shipping costs surged broadly across routes and source countries. We interpret this state dependence through a menu-cost model with imported intermediate inputs and endogenous substitution between imported and domestic inputs.

Suggested Citation

  • Simon Gilchrist & Bin Wei & Vivian Z. Yue & Egon Zakrajšek, 2026. "Shipping Cost Shocks and US Producer Prices: Normal versus Crisis Pass-through," Policy Hub, Federal Reserve Bank of Atlanta, vol. 2026(7), pages 1-54, September.
    • Handle: RePEc:fip:a00068:103990
    DOI: 10.29338/ph2026-07
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    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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