Working Paper: NBER ID: w24292
Authors: Alberto Cavallo; W. Erwin Diewert; Robert C. Feenstra; Robert Inklaar; Marcel P. Timmer
Abstract: We show that online prices can be used to construct quarterly purchasing power parities (PPPs) with a closely-matched set of goods and identical methodologies in a variety of developed and developing countries. Our results are close to those reported by the International Comparisons Program (ICP) in 2011 and the OECD in 2014, and can be used to obtain more up-to-date estimates of real consumption across countries without the need for consumer price index extrapolations. We discuss advantages and limitations associated with the use of online prices for PPs, including issues of representativeness and limited coverage of product categories and countries.
Keywords: Purchasing Power Parity; Online Prices; Real Consumption; International Comparisons
JEL Codes: E3; E31; F0; F41; O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| online prices (P22) | accuracy of real consumption measurements (D12) |
| online prices (P22) | quarterly purchasing power parities (PPPs) (F31) |
| online prices (P22) | timely estimates of real consumption (D12) |
| accuracy of real consumption measurements (D12) | reliability of consumption estimates (E21) |