Using Online Prices for Measuring Real Consumption Across Countries

Alberto  Cavallo; Erwin  Diewert; Robert C. Feenstra; Robert  Inklaar; Marcel P. Timmer

Article | AEA Papers and Proceedings | May 2018

Using Online Prices for Measuring Real Consumption Across Countries

by Alberto Cavallo, Erwin Diewert, Robert C. Feenstra, Robert Inklaar and 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 PPPs, including issues of representativeness and limited coverage of product categories and countries.

Keywords: Purchasing power parity; international economy; Online Prices; billion prices project; Economics; Macroeconomics; Price; Internet; Spending; Economy; Global Range; Measurement and Metrics;

Format: Print

Find at Harvard Read Now

Citation:

Cavallo, Alberto, Erwin Diewert, Robert C. Feenstra, Robert Inklaar, and Marcel P. Timmer. "Using Online Prices for Measuring Real Consumption Across Countries." AEA Papers and Proceedings 108 (May 2018): 483–487.

Supplemental Information

NBER Digest - Summary

Short summary of the paper in the NBER's monthly newsletter.
AEA Event Webcast

The webcast for our presentation at the 2018 Annual AEA Conference
Data and Replication Files

The data and code needed to replicate the results in this paper are available on Harvard University's Dataverse

In early 2020, a coronavirus pandemic swept the globe, ushering in unprecedented disruptions to the global economy. Both supply and demand were decimated by lockdowns and border closings, as well as reduced spending by fearful consumers. In response, governments around the world made equally unprecedented policy moves, spending trillions of dollars on fiscal stimulus measures to bridge the gap during the self-imposed shutdown. As the pandemic progressed, governments had to weigh the costs between loss of life due to opening up their economies and the economic devastation caused by delaying a reopening.

The HBS COVID-19 Global Policy Tracker is an initiative by the Business, Government and the International Economy (BGIE) unit at Harvard Business School (HBS) to collect and standardize economic policies implemented as a response to the coronavirus pandemic around the world. We focus on fiscal policy, monetary policy, and lockdowns and quantify government responses in common variables, units, and currencies to facilitate cross-country comparisons. The database is updated in real time with the efforts of several dozens of students at HBS and other Harvard schools.

Faculty & Research

Using Online Prices for Measuring Real Consumption Across Countries

Abstract

Citation:

Supplemental Information

About the Author

More from the Author