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Import Constraints

Author

Listed:
  • Diego Comin
  • Robert C. Johnson
  • Callum Jones

Abstract

During the recovery from the COVID-19 pandemic, international shipping and logistics capacity was strained, limiting the quantity of imports. We investigate the impact of an import constraint on inflation, following an increase in domestic demand. Whether the binding import constraint raises inflation depends on how it affects trade intermediation costs. If the binding constraint raises trade costs, then import price inflation also increases. In this case, however, foreign producer price inflation falls and import quantities rise more for inputs than final goods. Both these model results appear counterfactual, which suggests that import constraints may not explain observed import price inflation.

Suggested Citation

  • Diego Comin & Robert C. Johnson & Callum Jones, 2024. "Import Constraints," AEA Papers and Proceedings, American Economic Association, vol. 114, pages 118-123, May.
    • Handle: RePEc:aea:apandp:v:114:y:2024:p:118-23
    DOI: 10.1257/pandp.20241100
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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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