The effect of low-wage import competition on U.S. inflationary pressure
The effect of import competition from low-wage countries on U.S. inflationary pressure is estimated using a new methodology that identifies the causal response of prices to comparative advantage-induced supply shocks in these nations. The results of a panel covering 325 manufacturing industries from 1997 to 2006 show that imports from nine low-wage countries are associated with strong downward pressure on prices. When these nations capture a 1% share of the U.S. sector, the sector's producer prices decrease by 2.35%. Because import competition also influences the skewness of the distribution of price changes, it is likely to have impacted U.S. equilibrium inflation.
Year of publication: |
2010
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Authors: | Auer, Raphael ; Fischer, Andreas M. |
Published in: |
Journal of Monetary Economics. - Elsevier, ISSN 0304-3932. - Vol. 57.2010, 4, p. 491-503
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Publisher: |
Elsevier |
Keywords: | Low-wage country import competition Comparative advantage Globalization |
Saved in:
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