Replication data for: Income-Induced Expenditure Switching

Principal Investigator(s): View help for Principal Investigator(s) Rudolfs Bems; Julian di Giovanni

Name	File Type	Size	Last Modified
Replication			10/12/2019 06:00:AM
LICENSE.txt	text/plain	14.6 KB	10/12/2019 02:00:AM

Project Citation:

Bems, Rudolfs, and di Giovanni, Julian. Replication data for: Income-Induced Expenditure Switching. Nashville, TN: American Economic Association [publisher], 2016. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E113124V1

Project Description

Summary: 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.

Scope of Project

JEL Classification:
      E21 Macroeconomics: Consumption; Saving; Wealth
      F14 Empirical Studies of Trade
      F31 Foreign Exchange
      F32 Current Account Adjustment; Short-term Capital Movements
      I11 Analysis of Health Care Markets
      L81 Retail and Wholesale Trade; e-Commerce

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Published Versions

V1 [2019-10-12]

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