Measuring the Cost of Living in Mexico and the US

23 Pages Posted: 8 Sep 2020

See all articles by David Argente

David Argente

Pennsylvania State University

Chang-Tai Hsieh

University of Chicago - Booth School of Business; University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

Munseob Lee

University of California San Diego

Multiple version iconThere are 2 versions of this paper

Date Written: September 3, 2020

Abstract

Cross-country price indexes are crucial to compare living standards between countries and to measure global inequality. An accurate measurement of these price indexes has proven to be a difficult task because of the lack of accurate data on the consumption patterns of different countries. In this paper, we construct a unique data on prices and quantities for consumer packaged goods matched at the barcode-level across two countries, United States and Mexico. We estimate that the Mexican real consumption relative to the United States is larger than previously estimated. We identify heterogeneity in shopping behavior, quality of products, and variety availability as important sources of bias in international price comparisons.

Keywords: Price Index, Purchasing Power Parity, International Price Comparison

JEL Classification: E01, E31, O47

Suggested Citation

Argente, David and Hsieh, Chang-Tai and Lee, Munseob, Measuring the Cost of Living in Mexico and the US (September 3, 2020). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-123, Available at SSRN: https://ssrn.com/abstract=3686714 or http://dx.doi.org/10.2139/ssrn.3686714

David Argente

Pennsylvania State University ( email )

606 Kern Building
State College, PA 16801
United States

Chang-Tai Hsieh (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Munseob Lee

University of California San Diego ( email )

9500 Gilman Drive
La Jolla, CA 92093
United States

HOME PAGE: http://sites.google.com/site/munseob

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
17
Abstract Views
143
PlumX Metrics