Measuring the Cost of Living in Mexico and the US

David Argente, Chang-Tai Hsieh () and Munseob Lee
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Chang-Tai Hsieh: University of Chicago - Booth School of Business; University of California, Berkeley - Department of Economics; NBER

No 2020-123, Working Papers from Becker Friedman Institute for Research In Economics

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 has proven to be a difficult task because of the lack of accurate data on the consumption patterns of different countries. In this paper, we construct a unique data on prices and quantities for consumer packaged goods matched at the barcode-level across two countries, 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: Price index; purchasing power parity; international price comparison (search for similar items in EconPapers)
JEL-codes: E01 E31 O47 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2020
New Economics Papers: this item is included in nep-int, nep-mac and nep-opm
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Citations: View citations in EconPapers (2)

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Working Paper: Measuring the Cost of Living in Mexico and the US (2020)
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