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Using Online Prices for Measuring Real Consumption across Countries

Author

Listed:
  • Alberto Cavallo
  • W. Erwin Diewert
  • Robert C. Feenstra
  • Robert Inklaar
  • Marcel P. Timmer

Abstract

We show that online prices can be used to construct quarterly purchasing power parities (PPPs) with a closely matched set of goods and identical methodologies in a variety of developed and developing countries. Our results are close to those reported by the International Comparisons Program (ICP) in 2011 and the OECD in 2014, and can be used to obtain more up-to-date estimates of real consumption across countries without the need for consumer price index extrapolations. We discuss advantages and limitations associated with the use of online prices for PPs, including issues of representativeness and limited coverage of product categories and countries.

Suggested Citation

  • Alberto Cavallo & W. Erwin Diewert & Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2018. "Using Online Prices for Measuring Real Consumption across Countries," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 483-487, May.
  • Handle: RePEc:aea:apandp:v:108:y:2018:p:483-87
    Note: DOI: 10.1257/pandp.20181037
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    More about this item

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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