Template-Type: ReDIF-Paper 1.0
Author-Name: Raphael Auer
Author-X-Name-First: Raphael 
Author-X-Name-Last: Auer
Author-Name: Ariel Burstein
Author-X-Name-First: Ariel 
Author-X-Name-Last: Burstein
Author-Name: Sarah M Lein
Author-X-Name-First: Sarah M 
Author-X-Name-Last: Lein
Author-Name: Jonathan Vogel
Author-X-Name-First: Jonathan 
Author-X-Name-Last: Vogel
Title: Unequal expenditure switching: Evidence from Switzerland
Abstract: What are the unequal effects of changes in consumer prices on the cost of living? In the context of changes in import prices, most analyses focus on variation across households in initial expenditure shares on imported goods. However, the unequal welfare effects of non-marginal foreign price changes also depend on differences in how consumers substitute between imported and domestic goods, on which there is scant evidence. Using data from Switzerland surrounding the 2015 appreciation of the Swiss franc, we provide evidence that lower income households have higher price elasticities. These differences in elasticities contribute significantly to the unequal welfare effects of large import price changes.
Length: 57 pages
Creation-Date: 2022-02
File-URL: https://www.bis.org/publ/work1001.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1001.htm
File-Format: text/html
Number: 1001
Keywords: expenditure switching, large exchange rate shocks, gains from trade.
Classification-JEL: E3, F1, F41.
Handle: RePEc:bis:biswps:1001