Using food prices and consumption to examine Chinese cost of living. (12th September 2018)

• Record Type: Journal Article
• Authors: Cook, Jonathan A.; Gale, Fred
• Is Part Of: Pacific economic review. Volume 24:Number 1(2019)
• Page Start: 3
• Page End: 26
• Publication Date: 2018-09-12
• Subjects: Pacific Area -- Economic conditions -- Periodicals; 330
• DOI: 10.1111/1468-0106.12282
• Languages: English
• ISSNs: 1361-374X

Abstract

Abstract: This paper considers two approaches to examining potential bias in China's consumer price index: (i) inferring true changes in cost of living from consumer behaviour; and (ii) creating alternative price indices to compare with official indices. For (i), our semi‐parametric estimates agree with the recent finding of a large understatement in increases to the true cost of living. For (ii), we focus on food prices and explore potential causes of bias. We find some evidence of a new‐good bias. China's large‐scale migration also causes changes in the cost of living that are not reflected in the consumer price index.