Estimates of Cost-Price Passthrough from Business Survey Data

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Staff Reports

Estimates of Cost-Price Passthrough from Business Survey Data

Number 1062
June 2023

JEL classification: D4, E3, L2

Authors: Keshav Dogra, Sebastian Heise, Edward S. Knotek II, Brent H. Meyer, Robert W. Rich, Raphael S. Schoenle, Giorgio Topa, Wilbert van der Klaauw, and Wändi Bruine de Bruin

We examine businesses’ price-setting practices via open-ended interviews and in a quantitative survey module with business contacts from the Federal Reserve Banks of Atlanta, Cleveland, and New York in December 2022 and January 2023. Businesses indicated that their prices were strongly influenced by demand, a desire to maintain steady profit margins, and wages and labor costs. Survey respondents expected reduced growth in costs and prices of about 5 percent on average over the next year. Backward-looking, forward-looking, and hypothetical scenarios reveal average cost-price passthrough of around 60 percent, with meaningful heterogeneity across firms.

Available only in PDF

Author Disclosure Statement(s)

Keshav Dogra
The author declares that he has no relevant or material financial interests that relate to the research described in the blog post “How Do Firms Set Prices?” and the accompanying New York Fed Staff Report “Estimates of Cost-Price Passthrough from Business Survey Data.”

Sebastian Heise
I declare that I have no relevant or material financial interests that relate to the research described in this working paper and companion blog post.

Edward S. Knotek II
Edward S. Knotek II is a Senior Vice President and Director of Research at the Federal Reserve Bank of Cleveland. He declares that he has no relevant or material financial interests that relate to the research described in this Staff Report and companion blog post.

Brent H. Meyer
The author declares that he has no relevant or material financial interests that relate to the research described in this Staff Report and companion blog post.

Robert W. Rich
The author declares that he has no relevant or material financial interests that relate to the research described in this Staff Report and companion blog post.

Raphael Schoenle
The author declares that he has no relevant or material financial interests that relate to the research described in this Staff Report and companion blog post.

Giorgio Topa
Regarding the paper and companion blog post on “Estimates of Cost-Price Passthrough from Business Survey Data” I declare that I have no relevant or material financial interests that relate to the research described in this Staff Report and companion blog post.

Wilbert van der Klaauw
The author declares that he has no relevant or material financial interests that relate to the research described in this Staff Report and companion blog post.

Wändi Bruine de Bruin
The author declares that she has no relevant or material financial interests that relate to the research described in this Staff Report and companion blog post.

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