Estimating U.S. Consumer Gains from Chinese Imports
34 Pages Posted: 29 Mar 2018 Last revised: 22 Oct 2018
Date Written: October 15, 2018
We estimate the size of US consumer gains from Chinese imports during 2004-2015. Using barcode-level price and expenditure data, we construct inflation rates under CES preferences, and use Chinese exports to Europe as an instrument. We find significant negative effects of Chinese imports on US prices. This effect is driven by both changes in the prices of existing goods and the entry of new goods and it is similar across consumer groups by income or region. A simple benchmarking exercise suggests that Chinese imports led to a 0.19 ppt annual reduction in the price index for consumer tradables.
Keywords: Consumer Price Inflation, China Trade Shock
JEL Classification: F14
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