Working Paper: NBER ID: w12095
Authors: Gita Gopinath; Roberto Rigobon
Abstract: 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 microdata 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 U.S, there is producer currency pricing in exports and local currency pricing in imports. Third, import price rigidity has increased by 10 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%.
Keywords: No keywords provided
JEL Codes: F30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| U.S. imports and exports exhibit significant stickiness (F14) | Price stickiness (E31) |
| 90% of imports and 97% of exports are priced in dollars (F10) | Price stickiness (E31) |
| Probability of price adjustment for imports has declined by 10 percentage points from 1994 to 2004 (F14) | Price stickiness (E31) |
| Exchange rate passthrough into U.S. import prices is low (F16) | Price stickiness (E31) |
| 9 out of 10 sectors show passthrough rates below 33% (H29) | Exchange rate passthrough into U.S. import prices is low (F16) |