Quarterly Review
Has Excess Capacity Abroad Reduced
U.S. Inflationary Pressures?
Summer-Fall 1994Volume 19, Number 2

Author: James A. Orr

This article examines whether the sizable amount of excess capacity abroad in recent years has eased U.S. inflationary pressures by keeping import prices from rising as fast as the prices of U.S.-produced goods. The analysis finds that overall import price growth has roughly kept pace with U.S. inflation because the effects of lower inflation abroad have been offset by exchange rate changes. In the case of Japan, dollar depreciation has rendered excess capacity basically ineffective against U.S. inflationary pressures.

PDF full articlePDF5 pages / 343 kb
tools
Related New York Fed Content
By continuing to use our site, you agree to our Terms of Use and Privacy Statement. You can learn more about how we use cookies by reviewing our Privacy Statement.   Close