Working Paper: NBER ID: w28711
Authors: Alberto Cavallo; Robert C. Feenstra; Robert Inklaar
Abstract: We use the structure of the Melitz (2003) model to compare the cost of living and welfare across countries, while incorporating product variety measured by the count of barcodes or firms. For 47 countries, we compare welfare relative to the United States to conventional measures of real consumption. Relative welfare is similar to or higher than that indicated by real consumption for a select group of nations in Europe and some large countries like China and Russia, but lower in most other countries. This qualitative pattern has some similarities to that found in Jones and Klenow (2016), but for very different reasons.
Keywords: No keywords provided
JEL Codes: E01; F12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Domestic shocks (E32) | Product variety (L15) |
| Product variety (L15) | Cost of living (J39) |
| Cost of living (J39) | Welfare (I38) |
| Domestic shocks (E32) | Welfare (I38) |
| Product variety (L15) | Welfare (I38) |