This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Journal: Macroeconomics
  4. Forthcoming Articles
  5. Measuring the Cost of Living in Mexico and the U.S.

Measuring the Cost of Living in Mexico and the U.S.

Abstract

We use a dataset with prices and spending on consumer packaged goods matched at the barcode-level across the US and Mexico to measure the price index in Mexico relative to the US. Mexican prices relative to the US are 23% lower compared to the International Comparisons Project’s (ICP) price index. We decompose the 23% gap into the biases from imputation, sampling, quality, and variety. Quality bias increases Mexican prices by 48%. Imputation, sampling, and variety bias lowers Mexican prices by 11%, 13%, and 33%, respectively.

Forthcoming Article Downloads