BEGIN:VCALENDAR VERSION:2.0 METHOD:PUBLISH PRODID:-//Telerik Inc.//Sitefinity CMS 15.1//EN BEGIN:VTIMEZONE TZID:Eastern Standard Time BEGIN:STANDARD DTSTART:20251102T020000 RRULE:FREQ=YEARLY;BYDAY=1SU;BYHOUR=2;BYMINUTE=0;BYMONTH=11 TZNAME:Eastern Standard Time TZOFFSETFROM:-0400 TZOFFSETTO:-0500 END:STANDARD BEGIN:DAYLIGHT DTSTART:20250301T020000 RRULE:FREQ=YEARLY;BYDAY=2SU;BYHOUR=2;BYMINUTE=0;BYMONTH=3 TZNAME:Eastern Daylight Time TZOFFSETFROM:-0500 TZOFFSETTO:-0400 END:DAYLIGHT END:VTIMEZONE BEGIN:VEVENT DESCRIPTION:This paper examines the extent to which gains-from-trade predic tions from commonly-used trade theories are consistent with observed house hold consumption decisions. Our approach is based on inference from househ old-level estimation of food Engel curves in the US and in a few other cou ntries. For a given price index as the deflator of income\, deviations fro m food Engel curves indicate how biased that price index is relative to th e true household price index. We construct open-economy price indices base d on trade theory and data\, evaluate their biases according to our approa ch\, and compare them with the bias of official CPI statistics. We find th at theory-consistent open-economy price indices that account for industry- level heterogeneity and input-output linkages tend to eliminate a large fr action of the bias of CPI.Chong Xiang is Professor of Economics at Purdue. He has a diverse range of research interests\, including how we should ev aluate the qualities of educational systems across countries\; how globali zation and technology affect health\, wages and inequality\; how size and time contribute to comparative advantage\; and what factors shape the glob al trade in motion pictures and the globalization of Christianity. His res earch is published in such academic journals as the American Economic Revi ew\, Journal of International Economics\, and Review of Economics and Stat istics\, and featured in such media outlets as the Washington Post\, CTV n ews (Canada)\, and Public Ratio (U.S.). DTEND:20221107T221500Z DTSTAMP:20260512T020127Z DTSTART:20221107T204500Z LOCATION: SEQUENCE:0 SUMMARY:Gains from Trade and the Food Engel Curve UID:RFCALITEM639141336874458929 X-ALT-DESC;FMTTYPE=text/html:

This paper examines the extent to which gai ns-from-trade predictions from commonly-used trade theories are consistent with observed household consumption decisions. Our approach is based on i nference from household-level estimation of food Engel curves in the US an d in a few other countries. For a given price index as the deflator of inc ome\, deviations from food Engel curves indicate how biased that price ind ex is relative to the true household price index. We construct open-econom y price indices based on trade theory and data\, evaluate their biases acc ording to our approach\, and compare them with the bias of official CPI st atistics. We find that theory-consistent open-economy price indices that a ccount for industry-level heterogeneity and input-output linkages tend to eliminate a large fraction of the bias of CPI.

Chong Xiang is Profes sor of Economics at Purdue. He has a diverse range of research interests\, including how we should evaluate the qualities of educational systems acr oss countries\; how globalization and technology affect health\, wages and inequality\; how size and time contribute to comparative advantage\; and what factors shape the global trade in motion pictures and the globalizati on of Christianity. His research is published in such academic journals as the American Economic Review\, Journal of International Economics\, and R eview of Economics and Statistics\, and featured in such media outlets as the Washington Post\, CTV news (Canada)\, and Public Ratio (U.S.).

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