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  4. May 2018
  5. Using Online Prices for Measuring Real Consumption across Countries

Using Online Prices for Measuring Real Consumption across Countries

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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 PPs, including issues of representativeness and limited coverage of product categories and countries.

Citation

Cavallo, Alberto, W. Erwin Diewert, Robert C. Feenstra, Robert Inklaar, and Marcel P. Timmer. 2018. "Using Online Prices for Measuring Real Consumption across Countries." AEA Papers and Proceedings, 108: 483-87. DOI: 10.1257/pandp.20181037

Additional Materials

JEL Classification

  • C43 Index Numbers and Aggregation; Leading indicators
  • E21 Macroeconomics: Consumption; Saving; Wealth
  • E31 Price Level; Inflation; Deflation