Work

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

Year: 2018

Type: article

Abstract: The rise of ecommerce and the contrasts between online and traditional retail pricing behavior have raised questions about potential bias in CPI inflation. Using new data on online transactions, this paper shows that aggregate matched-model inflation online from 2014-2017 was more than a full percentage point lower than in the corresponding CPI. In addition, new products were tremendously important. Quantifying the net increase in number of new goods minus the exit of old goods suggests that actual inflation online may have been an additional 1.5 to 2.5 percentage points lower than indicated in matched model price indices like the CPI.

Source: AEA Papers and Proceedings

DOI: 10.1257/pandp.20181038

Authors: Austan D. Goolsbee, Peter J. Klenow

Institutions: National Bureau of Economic Research, University of Chicago, Stanford University

Language: English

Topic: Consumer Market Behavior and Pricing

Subfield: Marketing

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

Funders: Booth School of Business, University of Chicago, Stanford Institute for Economic Policy Research

OpenAlex ID: W2804431633