Sticky Borders

The stickiness and currency of pricing of traded goods play a central role in international macroeconomics; however, empirical evidence on these features is seriously limited. To address this, we use micro data on U.S. import and export prices at the dock for the period 1994–2005 and present four main results: First, the median price duration in the currency of pricing is 10.6 (12.8) months for imports (exports). Second, 90% (97%) of imports (exports) are priced in dollars. Consequently, contrary to standard modeling assumptions, for the United States, there is producer currency pricing in exports and local currency pricing in imports. Third, import price rigidity has increased by ten percentage points, with increasing rigidity in differentiated goods prices. Fourth, even conditioning on a price change, exchange rate pass-through into U.S. import prices is low, at 22%.