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Consumption Based Estimates of Urban Chinese Growth

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  • Marcos Chamon
  • Irineu E. Carvalho Filho

Abstract

This paper estimates the household income growth rates implied by food demand in a sample of urban Chinese households in 1993–2005. Our estimates, based on Engel curves for food consumption, indicate an average per capita income growth of 6.8 percent per year in 1993–2005. This figure is slightly larger than the 5.9 percent per year obtained by deflating nominal incomes by the CPI. We attribute this discrepancy to a small bias in the CPI, which is of a similar magnitude to the one often associated with the CPI in the United States. Our estimates indicate stronger gains among poorer households, suggesting that urban inflation up to 2005 in China was “pro-poor,†in the sense that the increase in the cost of living for poorer households was smaller than for the average one.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 13/265.

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Length: 24
Date of creation: 23 Dec 2013
Date of revision:
Handle: RePEc:imf:imfwpa:13/265

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Related research

Keywords: Economic growth; China; Income distribution; Private sector; Economic models; Household consumption; Income growth; CPI Bias; consumption expenditures; labor income; household expenditure; household characteristics; household income; consumer price index; consumption based estimates; household expenditures; aggregate consumption; consumption patterns; consumption growth; consumption measures; consumption data; household consumption expenditures; relative price changes; price deflator; expenditure inequality; real per capita consumption; total consumption; expenditure distribution; household expenditure survey; income inequality; consumption inequality;

This paper has been announced in the following NEP Reports:

References

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  1. Filho, Irineu de Carvalho & Chamon, Marcos, 2012. "The myth of post-reform income stagnation: Evidence from Brazil and Mexico," Journal of Development Economics, Elsevier, vol. 97(2), pages 368-386.
  2. Angus Maddison, 2006. "DO OFFICIAL STATISTICS EXAGGERATE CHINA's GDP GROWTH? A REPLY TO CARSTEN HOLZ," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(1), pages 121-126, 03.
  3. Timothy Beatty & Erling Røed Larsen, 2005. "Using Engel curves to estimate bias in the Canadian CPI as a cost of living index," Canadian Journal of Economics, Canadian Economics Association, vol. 38(2), pages 482-499, May.
  4. John Gibson & Grant Scobie, 2010. "Using Engel curves to estimate CPI bias in a small, open, inflation-targeting economy," Applied Financial Economics, Taylor & Francis Journals, vol. 20(17), pages 1327-1335.
  5. David E. Lebow & Jeremy B. Rudd, 2003. "Measurement Error in the Consumer Price Index: Where Do We Stand?," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 159-201, March.
  6. Yatchew, A., 1997. "An elementary estimator of the partial linear model," Economics Letters, Elsevier, vol. 57(2), pages 135-143, December.
  7. John Gibson & Steven Stillman, 2004. "CPI Bias and Real Living Standards in Russia During The Transition," Econometric Society 2004 North American Summer Meetings 504, Econometric Society.
  8. Jerry Hausman, 2003. "Sources of Bias and Solutions to Bias in the Consumer Price Index," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 23-44, Winter.
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