Measuring the Cost of Living in Mexico and the United States

David Argente, Chang-Tai Hsieh and Munseob Lee

American Economic Journal: Macroeconomics, 2023, vol. 15, issue 3, 43-63

Abstract: We use a dataset with prices and spending on consumer packaged goods matched at the bar code level across the United States and Mexico to measure the price index in Mexico relative to the United States. Mexican prices relative to the United States are 23 percent lower compared to the International Comparisons Project's (ICP) price index. We decompose the 23 percent gap into the biases from imputation, sampling, quality, and variety. Quality bias increases Mexican prices by 48 percent. Imputation, sampling, and variety bias lowers Mexican prices by 11 percent, 13 percent, and 33 percent, respectively.

JEL-codes: C43 E31 I31 O11 O12 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1257/mac.20200486

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