NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Some Empirical Evidence on Hysteresis in Aggregate US Import Prices

Richard Baldwin

NBER Working Paper No. 2483*
Issued in 1988
NBER Program(s):   ITI    IFM

This paper empirically investigates the hypothesis that hysteresis has occurred in US aggregate non-oil import prices. We find strong evidence that a shift has occurred in the exchange rate pass-through relationship in the 1980~~ and that the nature of the shift is consistent with the hysteresis hypothesis. Results on two specific structural models of this phenomenon (the beachhead model and the bottleneck model) are less conclusive. The data broadly support both models, but neither by itself can provide a convincing accounting of all the evidence.

*Published: MIT PRess books edited by S. Gerlach and P. Petri Baldwin, Richard E. "Hysteresis In Import Prices: The Beachhead Effect," American Economic Review, 1988, v78(4), 773-785.

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