The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
There is a widespread view that the adjustment of U.S. trade prices--and hence merchandise trade flows--in the face of the substantial dollar depreciation since early 1985 has been slower than might have been expected. This paper examines the recent behavior of U.S. trade prices, and concludes that the modest movements are largely attributable to a decline in computer prices, swings in commodity prices, and the growing importance of computers in U.S. trade. Empirical results suggest that once the influence of computer and commodity prices are taken into account, the recent behavior of U.S. trade prices is not out of line with historical experience.