Estimating U.S. Consumer Gains from Chinese Imports

34 Pages Posted: 29 Mar 2018 Last revised: 22 Oct 2018

See all articles by Liang Bai

Liang Bai

University of Edinburgh

Sebastian Stumpner

University of Montreal - Department of Economics

Date Written: October 15, 2018

Abstract

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

Suggested Citation

Bai, Liang and Stumpner, Sebastian, Estimating U.S. Consumer Gains from Chinese Imports (October 15, 2018). Available at SSRN: https://ssrn.com/abstract=3152455 or http://dx.doi.org/10.2139/ssrn.3152455

Liang Bai (Contact Author)

University of Edinburgh ( email )

Old College
South Bridge
Edinburgh, Scotland EH8 9JY
United Kingdom

Sebastian Stumpner

University of Montreal - Department of Economics ( email )

C.P. 6128, succursale Centre-Ville
Montreal, Quebec H3C 3J7
Canada

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