Income-Induced Expenditure Switching

• 成果类型: Article
• 署名作者: Bems, Rudolfs; di Giovanni, Julian
• 署名单位: University of Tokyo; Pompeu Fabra University; ICREA; Barcelona School of Economics; Centre de Recerca en Economia Internacional (CREI); Center for Economic & Policy Research (CEPR)
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20160251
• 发表日期: 2016
• 页码: 3898-3931
• 关键词: product quality; exchange; TRENDS; prices

摘要

This paper shows that an income effect can drive expenditure switching between domestic and imported goods. We use a unique Latvian scanner-level dataset, covering the 2008-2009 crisis, to document several empirical findings. First, expenditure switching accounted for one-third of the fall in imports, and took place within narrowly defined product groups. Second, there was no corresponding within group change in relative prices. Third, consumers substituted from expensive imports to cheaper domestic alternatives. These findings motivate us to estimate a model of nonhomothetic consumer demand, which explains two-thirds of the observed expenditure switching. Estimated switching is driven by income, not changes in relative prices.