Whose inflation? A characterization of the CPI plutocratic gap
AbstractPrais (1958) showed that the standard CPI computed by most statistical agencies can be interpreted as a weighted average of household price indexes, where the weight of each household is determined by its total expenditures. In this paper, we decompose the CPI plutocratic gap--i.e. the difference between the standard CPI and a democratically-weighted index, where each household has the same weight--as the product of expenditure inequality and the sample covariance between the elementary individual price indexes and a term which is a function of the expenditure elasticity of each good. This decomposition allows us to interpret variations in the size and sign of the plutocratic gap, and to discuss issues pertaining to group indexes. Copyright 2005, Oxford University Press.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 57 (2005)
Issue (Month): 4 (October)
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Other versions of this item:
- Eduardo Ley, 2001. "Whose Inflation? A Characterization of the CPI Plutocratic Gap," Public Economics 0110001, EconWPA, revised 20 Oct 2001.
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
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