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Estimating Unequal Gains across U.S. Consumers with Supplier Trade Data

Colin Hottman () and Ryan Monarch

No 1220, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Using supplier-level trade data, we estimate the effect on consumer welfare from changes in U.S. imports both in the aggregate and for different household income groups from 1998 to 2014. To do this, we use consumer preferences which feature non-homotheticity both within sectors and across sectors. After structurally estimating the parameters of the model, using the universe of U.S. goods imports, we construct import price indexes in which a variety is defined as a foreign establishment producing an HS10 product that is exported to the United States. We find that lower income households experienced the most import price inflation, while higher income households experienced the least import price inflation during our time period. Thus, we do not find evidence that the consumption channel has mitigated the distributional effects of trade that have occurred through the nominal income channel in the United States over the past two decades.

Keywords: Import price index; Non-homotheticity; Real income inequality; Product variety; Markups (search for similar items in EconPapers)
JEL-codes: D12 E31 F14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-int and nep-mac
Date: 2018-01-17
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:1220

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DOI: 10.17016/IFDP.2018.1220

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