The effect of low-wage import competition on U.S. inflationary pressure

Raphael Auer and Andreas Fischer ()

Journal of Monetary Economics, 2010, vol. 57, issue 4, 491-503

Abstract: 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.

Keywords: Low-wage; country; import; competition; Comparative; advantage; Globalization (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (90)

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Related works:
Working Paper: The Effect of Trade with Low-Income Countries on U.S. Industry (2008)
Working Paper: The effect of trade with low-income countries on U.S. industry (2008)
Working Paper: The Effect of Low-Wage Import Competition on U.S. Inflationary Pressure (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:57:y:2010:i:4:p:491-503

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