Unequal expenditure switching: Evidence from Switzerland

Raphael Auer, Ariel Burstein, Sarah Lein and Jonathan Vogel

No 1001, BIS Working Papers from Bank for International Settlements

Abstract: What are the unequal effects of changes in consumer prices on the cost of living? In the context of changes in import prices, most analyses focus on variation across households in initial expenditure shares on imported goods. However, the unequal welfare effects of non-marginal foreign price changes also depend on differences in how consumers substitute between imported and domestic goods, on which there is scant evidence. Using data from Switzerland surrounding the 2015 appreciation of the Swiss franc, we provide evidence that lower income households have higher price elasticities. These differences in elasticities contribute significantly to the unequal welfare effects of large import price changes.

Keywords: expenditure switching; large exchange rate shocks; gains from trade. (search for similar items in EconPapers)
JEL-codes: E3 F1 F41 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2022-02
New Economics Papers: this item is included in nep-eur, nep-int, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Unequal Expenditure Switching: Evidence from Switzerland (2024)
Working Paper: Unequal expenditure switching: Evidence from Switzerland (2023)
Working Paper: Unequal Expenditure Switching: Evidence from Switzerland (2023)
Working Paper: Unequal expenditure switching: Evidence from Switzerland (2022)
Working Paper: Unequal Expenditure Switching: Evidence from Switzerland (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:1001

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