Economics at your fingertips  

How does taste and quality impact on import prices?

Konstantins Benkovskis () and Julia Wörz
Authors registered in the RePEc Author Service: Julia Maria Woerz ()

Review of World Economics (Weltwirtschaftliches Archiv), 2014, vol. 150, issue 4, 665-691

Abstract: Understanding the dynamics of import prices is an important but challenging issue that affects our assessment of welfare. We propose an exact import price index by extending the analysis of Broda and Weinstein (Q J Econ 121(2):541–585, 2006 ), who include growth in product variety in their calculations of import prices. While still relying on Armington’s (Int Monet Fund Staff Pap 16(1):159–178, 1969 ) definition of variety, we relax two assumptions, allowing the set of products and unobserved taste and quality parameter to vary. Our modified import price index shows that gains from variety in European G7 countries, although positive, are small compared with gains from taste and quality. Using food and tobacco products as a benchmark with unchanged taste and quality, we find significant gains from shifts in consumer preferences and improving quality for Germany, France, Italy and the UK between 1995 and 2012. By comparing results based on different benchmark groups we further flag the importance of consumer taste in international trade. Copyright Kiel Institute 2014

Keywords: Import price index; Variety; Taste; Quality; Welfare gains; C43; D60; F12; F14; L15 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

Related works:
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:

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10290/PS2

Access Statistics for this article

Review of World Economics (Weltwirtschaftliches Archiv) is currently edited by Paul Bergin, Holger Görg, Cédric Tille and Gerald Willmann

More articles in Review of World Economics (Weltwirtschaftliches Archiv) from Springer, Institut für Weltwirtschaft (Kiel Institute for the World Economy) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2019-05-21
Handle: RePEc:spr:weltar:v:150:y:2014:i:4:p:665-691