Bias in U.S. Import Prices and Demand

Robert Feenstra and Clinton R. Shiells

No 4841, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The purpose of the paper is to measure the potential bias in the U.S. import price index due to the appearance of new product varieties, or new foreign suppliers, and determine the effect of this bias on the estimated income elasticity of import demand. Existing import price indexes are based on a sample of products from importing firms. We argue that if the share of import expenditure on the sampled products is falling over time, this will lead to an upward bias in the measured index. Using a correction based on the falling expenditure share on sampled countries, we find that the income elasticity of aggregate U.S. import demand is reduced from 2.5 to 1.7, or about halfway to unity. Our estimates suggest that the aggregate import price index is upward biased by about one and one-half percentage points annually.

JEL-codes: C43 F14 (search for similar items in EconPapers)
Date: 1994-08
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as The Economics of New Goods, Timothy F. Bresnahan and Robert J. Gordon, eds. , pp. 249, (Chicago: University of Chicago Press, 1997).
Published as Bias in U.S. Import Prices and Demand , Robert C. Feenstra, Clinton R. Shiells. in The Economics of New Goods , Bresnahan and Gordon. 1997

Downloads: (external link)
http://www.nber.org/papers/w4841.pdf (application/pdf)

Related works:
Chapter: Bias in U.S. Import Prices and Demand (1996)
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: https://EconPapers.repec.org/RePEc:nbr:nberwo:4841

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w4841

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().