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The Consumer Price Index: A Research Agenda and Three Proposals

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  • Robert A. Pollak

Abstract

This paper argues that dealing with current concerns about the CPI within the framework of economic theory requires developing the theory of the cost-of-living index under more general assumptions than have thus far been standard. It examines three neglected but critical issues that should rank high on the research agenda because of their practical implications for index number construction: Whose cost-of-living index? Why shop? and What is a good? It concludes by discussing the intersection between the technical problems of constructing the CPI and the political problems of indexing taxes and transfers.

Suggested Citation

  • Robert A. Pollak, 1998. "The Consumer Price Index: A Research Agenda and Three Proposals," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 69-78, Winter.
    • Handle: RePEc:aea:jecper:v:12:y:1998:i:1:p:69-78
    Note: DOI: 10.1257/jep.12.1.69
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.12.1.69
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    References listed on IDEAS

    as
    1. Pollak, Robert A., 1989. "The Theory of the Cost-of-Living Index," OUP Catalogue, Oxford University Press, number 9780195058703.
    2. Reinsdorf, Marshall, 1994. "The Effect of Price Dispersion on Cost of Living Indexes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 137-149, February.
    3. Baye, Michael R, 1985. "Price Dispersion and Functional Price Indices," Econometrica, Econometric Society, vol. 53(1), pages 213-223, January.
    4. George J. Stigler, 1967. "Imperfections in the Capital Market," Journal of Political Economy, University of Chicago Press, vol. 75(3), pages 287-287.
    5. Pollak, Robert A., 1981. "The social cost of living index," Journal of Public Economics, Elsevier, vol. 15(3), pages 311-336, June.
    6. Pollak, Robert A, 1980. "Group Cost-of-Living Indexes," American Economic Review, American Economic Association, vol. 70(2), pages 273-278, May.
    7. Shelly Lundberg & Robert A. Pollak, 1996. "Bargaining and Distribution in Marriage," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 139-158, Fall.
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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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