Gains from Trade and the Food Engel Curve

Farid Farrokhi, David Jinkins and Chong Xiang

No 15-2022, Working Papers from Copenhagen Business School, Department of Economics

Abstract: This paper examines the extent to which gains-from-trade predictions from commonly-used trade theories are consistent with observed household consumption decisions. Our approach is based on inference from household-level estimation of food Engel curves in the US and in a few other countries. For a given price index as the deflator of income, deviations from food Engel curves indicate how biased that price index is relative to the true household price index. We construct open-economy price indices based on trade theory and data, evaluate their biases according to our approach, and compare them with the bias of official CPI statistics. We find that theory-consistent open-economy price indices that account for industry-level heterogeneity and input-output linkages tend to eliminate a large fraction of the bias of CPI.

Keywords: Food Engel Curves; Price Indices; Household-level Consumption; Gains from Trade (search for similar items in EconPapers)
JEL-codes: D12 E31 F14 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2022-10-29
New Economics Papers: this item is included in nep-agr and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://hdl.handle.net/10398/36928e2f-ccbe-45aa-b83e-deaccb7edd35 Full text (application/pdf)
Full text not avaiable

Related works:
Working Paper: Gains from Trade and the Food Engel Curve (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:cbsnow:2022_015

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Copenhagen Business School, Department of Economics Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1.floor, DK-2000 Frederiksberg, Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by CBS Library Research Registration Team ().