Working Paper: NBER ID: w27806
Authors: David O. Argente; Changtai Hsieh; Munseob Lee
Abstract: Cross-country price indexes are crucial to compare living standards between countries and to measure global inequality. An accurate measurement of these price indexes is a difficult task because of the lack of accurate data on the consumption patterns of different countries. We construct a unique data on prices and quantities for consumer packaged goods matched at the barcode-level across the United States and Mexico. We estimate that the Mexican real consumption relative to the United States is larger than previously estimated. We identify heterogeneity in shopping behavior, quality of products, and variety availability as important sources of bias in international price comparisons.
Keywords: Cost of Living; International Price Indexes; Global Inequality
JEL Codes: E0; F0; O0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| shopping behavior (D19) | price measurement bias (E30) |
| shopping frequency (L81) | price measurement bias (E30) |
| product quality (L15) | price discrepancies (D49) |
| availability of products (L15) | price comparisons (P22) |