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Trade, access to varieties, and patterns of consumption

Amandine Aubry ()

Review of International Economics, 2022, vol. 30, issue 2, 369-400

Abstract: This paper provides empirical evidence that product diversity drove a part of the evolution of consumers’ spending in the US over the 1993–2018 period. The change in the set of varieties available led consumers to increase by 1.19% the share of their budget allocated to a sector subject to the average variety expansion over that period. I exploit the exogenous change in the range of products available due to the growth of international trade to identify the causal relation. Using this identification strategy, I show that through changes in product diversity, international trade has a sizable effect on the evolution of patterns of consumption in a country, especially relative to the price effect.

Date: 2022
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