Welfare and Output With Income Effects and Taste Shocks
统一分析了品味冲击和非齐次偏好下福利对预算集或技术变化的反应，提出了衡量生产可能性边界的福利指标，并推广了Hulten定理。长期应用显示结构转型中收入效应或品味变化使鲍莫尔成本病对福利影响加倍；短期应用表明链式加权平减指数低估了福利相关通胀；COVID-19衰退中链式实际消费和GDP在品味冲击下不可靠。
Abstract We present a unified treatment of how welfare responds to changes in budget sets or technologies with taste shocks and nonhomothetic preferences. We propose a welfare metric that ranks production possibility frontiers that differs from one that ranks budget sets and characterize it using a general equilibrium generalization of Hicksian demand. This extends Hulten’s theorem, the basis for constructing aggregate quantity indices, to environments with nonhomothetic and unstable preferences. We illustrate our results using both long- and short-run applications. In the long run, we show that if structural transformation is caused by income effects or changes in tastes, rather than substitution effects, then Baumol’s cost disease is twice as important for our preferred measure of welfare. In the short run, we show that standard chain-weighted deflators understate welfare-relevant inflation for current tastes. Finally, using the COVID-19 recession, we illustrate that chain-weighted real consumption and real GDP are unreliable metrics for measuring welfare or production when there are taste shocks.