Product Variety, the Cost of Living and Welfare Across Countries

Alberto Cavallo*, Robert C. Feenstra*, Robert Inklaar*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

5 Citations (Scopus)
93 Downloads (Pure)

Abstract

We use the structure of the Melitz (2003) model to compute the cost of living and welfare across 47 countries, and compare these to conventional measures of prices and real consumption from the International Comparisons Project (ICP). The cost of living is inferred without directly using ICP prices of traded goods, but instead relying on output prices, openness, domestic trade costs and product variety measured by the counts of barcodes or firms. We find that welfare is lower than indicated by real consumption for most countries, but similar in China and Japan and similar or higher in some European countries.
Original languageEnglish
Article number2
Pages (from-to)44-60
Number of pages27
JournalAmerican Economic Journal. Macroeconomics
Volume15
Issue number4
Early online date2023
DOIs
Publication statusPublished - Oct-2023

Fingerprint

Dive into the research topics of 'Product Variety, the Cost of Living and Welfare Across Countries'. Together they form a unique fingerprint.

Cite this