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Measuring the Cost of Living in Mexico and the US

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  • David O. Argente
  • Chang-Tai Hsieh
  • Munseob Lee

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 is a difficult task because of the lack of accurate data on the consumption patterns of different countries. We construct a unique data on prices and quantities for consumer packaged goods matched at the barcode-level across the 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.

Suggested Citation

  • David O. Argente & Chang-Tai Hsieh & Munseob Lee, 2020. "Measuring the Cost of Living in Mexico and the US," NBER Working Papers 27806, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27806
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    Cited by:

    1. Strasser, Georg & Messner, Teresa & Rumler, Fabio & Ampudia, Miguel, 2023. "Inflation heterogeneity at the household level," Occasional Paper Series 325, European Central Bank.
    2. David R Baqaee & Ariel Burstein, 2023. "Welfare and Output With Income Effects and Taste Shocks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 138(2), pages 769-834.

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    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • F0 - International Economics - - General
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General

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