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NATIONAL BUREAU OF ECONOMIC RESEARCH
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Internet Rising, Prices Falling: Measuring Inflation in a World of E-Commerce

Austan D. Goolsbee, Peter J. Klenow

NBER Working Paper No. 24649
Issued in May 2018
NBER Program(s):Economic Fluctuations and Growth Program, The Monetary Economics Program, Productivity, Innovation, and Entrepreneurship Program

We use Adobe Analytics data on online transactions for millions of products in many different categories from 2014 to 2017 to shed light on how online inflation compares to overall inflation, and to gauge the magnitude of new product bias online. The Adobe data contain transaction prices and quantities purchased. We estimate that online inflation was about 1 percentage point lower than in the CPI for the same categories from 2014--2017. In addition, the rising variety of products sold online, implies roughly 2 percentage points lower inflation than in a matched model/CPI-style index.

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Document Object Identifier (DOI): 10.3386/w24649

Published: Austan D. Goolsbee & Peter J. Klenow, 2018. "Internet Rising, Prices Falling: Measuring Inflation in a World of E-Commerce," AEA Papers and Proceedings, vol 108, pages 488-92.

 
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