The Price Effect of Trade: Evidence of the China Shock and Canadian Consumer Prices

Myeongwan Kim ()

No 2020-02, CSLS Research Reports from Centre for the Study of Living Standards

Abstract: The explosive growth in Chinese imports to Canada over the last two decades has had both negative and positive effects. In this paper, we look at the impact of Chinese imports on the prices Canadians pay for household consumption goods. We find Canadians have benefited from lower prices on some goods and lower inflation overall. To quantify the importance of Chinese imports for individual consumer products and map them to consumer price data, we construct concordance between products in the consumer price index (CPI) and commodities in the Harmonized Commodity Description and Coding System. We estimate that over the 2001-2011 period, cumulative inflation would have been 1.17-percentage-points higher for the total CPI had there been no change in the Chinese share of total imports in Canada. This assumes other factors are held constant. The average annual inflation for the total CPI was 2.1 per cent over the 2001-2011 period, implying that annual inflation would have been about 0.12-percentage-points higher if there had not been a surge in imports from China.

Keywords: China Shock; Canada; Imports; Productivity; Innovation (search for similar items in EconPapers)
JEL-codes: F62 L60 O32 O51 O53 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-cna, nep-eff, nep-int and nep-tra
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