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A newly identified source of potential CPI bias: Weekly versus monthly unit value price indexes

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  • Diewert, W. Erwin
  • Fox, Kevin J.
  • de Haan, Jan

Abstract

We find that unit value prices used for constructing the CPI should be for the same period as the index to be constructed, rather than for a sub-period. The latter approach can lead to an upward bias in the CPI.

Suggested Citation

  • Diewert, W. Erwin & Fox, Kevin J. & de Haan, Jan, 2016. "A newly identified source of potential CPI bias: Weekly versus monthly unit value price indexes," Economics Letters, Elsevier, vol. 141(C), pages 169-172.
    • Handle: RePEc:eee:ecolet:v:141:y:2016:i:c:p:169-172
    DOI: 10.1016/j.econlet.2016.02.022
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    References listed on IDEAS

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    1. Ivancic, Lorraine & Erwin Diewert, W. & Fox, Kevin J., 2011. "Scanner data, time aggregation and the construction of price indexes," Journal of Econometrics, Elsevier, vol. 161(1), pages 24-35, March.
    2. Fox, Kevin J. & Syed, Iqbal A., 2016. "Price discounts and the measurement of inflation," Journal of Econometrics, Elsevier, vol. 191(2), pages 398-406.
    3. Jan de Haan & Frances Krsinich, 2014. "Scanner Data and the Treatment of Quality Change in Nonrevisable Price Indexes," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 32(3), pages 341-358, July.
    4. W. Erwin Diewert, 1995. "Axiomatic and Economic Approaches to Elementary Price Indexes," NBER Working Papers 5104, National Bureau of Economic Research, Inc.
    5. Silver, Mick & Heravi, Saeed, 2005. "A Failure in the Measurement of Inflation: Results From a Hedonic and Matched Experiment Using Scanner Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 269-281, July.
    6. Reinsdorf, Marshall B, 1999. "Using Scanner Data to Construct CPI Basic Component Indexes," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(2), pages 152-160, April.
    7. Lorraine Ivancic & Kevin J. Fox, 2013. "Understanding Price Variation Across Stores and Supermarket Chains: Some Implications for CPI Aggregation Methods," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(4), pages 629-647, December.
    8. Mick Silver, 2010. "The Wrongs And Rights Of Unit Value Indices," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(s1), pages 206-223, June.
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    Cited by:

    1. Kevin J. Fox & Peter Levell & Martin O'Connell, 2023. "Inflation measurement with high frequency data," IFS Working Papers W23/29, Institute for Fiscal Studies.
    2. Janine Boshoff & Xuxin Mao & Garry Young, 2020. "Outlier detection methodologies for alternative data sources: International review of current practices," National Institute of Economic and Social Research (NIESR) Discussion Papers 523, National Institute of Economic and Social Research.
    3. Enzo D’Innocenzo & Alessandra Luati & Mario Mazzocchi, 2023. "A robust score-driven filter for multivariate time series," Econometric Reviews, Taylor & Francis Journals, vol. 42(5), pages 441-470, May.

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    More about this item

    Keywords

    Elementary price indexes; Aggregation; Inflation;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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