Using Food Prices and Consumption to Examine Chinese Cost of Living

32 Pages Posted: 7 Feb 2014 Last revised: 5 Oct 2018

See all articles by Jonathan A Cook

Jonathan A Cook

Public Company Accounting Oversight Board

H. Frederick Gale

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Multiple version iconThere are 2 versions of this paper

Date Written: May 1, 2018

Abstract

This paper considers two approaches to examining potential bias in China's CPI: (i) inferring true changes in cost of living from consumer behavior; 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 CPI.

Keywords: China, Cost of living, Food prices, CPI bias

JEL Classification: E31, E20, O10

Suggested Citation

Cook, Jonathan A and Gale, H. Frederick, Using Food Prices and Consumption to Examine Chinese Cost of Living (May 1, 2018). Available at SSRN: https://ssrn.com/abstract=2390982 or http://dx.doi.org/10.2139/ssrn.2390982

Jonathan A Cook (Contact Author)

Public Company Accounting Oversight Board ( email )

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Washington, DC 20006-2
United States

H. Frederick Gale

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
202-694-5215 (Phone)

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