This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Review: Vol. 102 No. 7 (December 2012)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter

Explore:

AER - All Issues

AER Forthcoming Articles

Lost in Transit: Product Replacement Bias and Pricing to Market

Article Citation

Nakamura, Emi, and Jón Steinsson. 2012. "Lost in Transit: Product Replacement Bias and Pricing to Market." American Economic Review, 102(7): 3277-3316.

DOI: 10.1257/aer.102.7.3277

Abstract

In the microdata underlying US trade price indexes, 40 percent of products are replaced before a single price change is observed and 70 percent are replaced after two price changes or fewer. A price index that focuses on price changes for identical items may, therefore, miss an important component of price adjustment occurring at the time of product replacements. We provide a model of this "product replacement bias" and quantify its importance using US data. Accounting for product replacement bias, long-run exchange rate "pass-through" is substantially higher than conventional estimates suggest, and the terms of trade are substantially more volatile. (JEL F14, F31)

Article Full-Text Access

Full-text Article

Additional Materials

Download Data Set (267.04 KB) | Online Appendix (202.04 KB)

Authors

Nakamura, Emi (Columbia U)
Steinsson, Jón (Columbia U)

JEL Classifications

F14: Empirical Studies of Trade
F31: Foreign Exchange


American Economic Review


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AER - All Issues

AER - Forthcoming Articles

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us