Internet Rising, Prices Falling: Measuring Inflation in a World of E-Commerce

32 Pages Posted: 5 Jun 2018

See all articles by Austan Goolsbee

Austan Goolsbee

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Peter J. Klenow

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: June 5, 2018

Abstract

We use Adobe Analytics data on online transactions for millions of products in many different categories from 2014 to 2017 to shed light on how online inflation compares to overall inflation, and to gauge the magnitude of new product bias online. The Adobe data contain transaction prices and quantities purchased. We estimate that online inflation was about 1 percentage point lower than in the CPI for the same categories from 2014-2017. In addition, the rising variety of products sold online, implies roughly 2 percentage points lower inflation than in a matched model/CPI-style index.

Suggested Citation

Goolsbee, Austan and Klenow, Peter J., Internet Rising, Prices Falling: Measuring Inflation in a World of E-Commerce (June 5, 2018). Becker Friedman Institute for Research in Economics Working Paper No. 2018-35. Available at SSRN: https://ssrn.com/abstract=3191099 or http://dx.doi.org/10.2139/ssrn.3191099

Austan Goolsbee (Contact Author)

University of Chicago - Booth School of Business ( email )

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National Bureau of Economic Research (NBER)

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Peter J. Klenow

Stanford University - Department of Economics ( email )

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Stanford, CA 94305-6072
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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