Research / BFI Working PaperSep 03, 2020

Measuring the Cost of Living in Mexico and the US

David Argente, Chang-Tai Hsieh, Munseob Lee

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.

More Research From These Scholars

BFI Working Paper Oct 16, 2019

Grasp the Large, Let Go of the Small: The Transformation of the State Sector in China

Chang-Tai Hsieh, Zheng (Michael) Song
Topics:  Uncategorized
BFI Working Paper Oct 16, 2019

The Return to Capital in China

Chong-En Bai, Chang-Tai Hsieh, Yingyi Qian
Topics:  Uncategorized
BFI Working Paper Nov 18, 2019

A Global View of Creative Destruction

Chang-Tai Hsieh, Peter J. Klenow, Ishan B. Nath
Topics:  Technology & Innovation, Industrial Organization