This paper exploits a three-dimensional panel data set of prices on 27 traded goods, over 88 quarters, across 96 cities in the U.S. and Japan. We show that a simple average of good-level real exchange rates tracks the nominal exchange rate well, suggesting strong evidence of sticky prices....

It has been suggested that recent findings of a decline in aggregate exchange rate pass-through are due to changes in demand elasticities within the U.S., or to changes in competitive (supply) conditions in for those imports. An alternate explanation is that the commodity composition of U.S....

This paper argues that the stability of exchange rate pass-through is not well tested in common econometric specifications of pass-through equations. This is because (a) expected future exchange rate changes are an importnt omitted variable in these estimations, and (b) the use of aggregate data...