Using Engel curves to measure CPI bias for Indonesia
AbstractTo measure real income growth over time, a price index is needed to adjust for changes in the cost of living. The consumer price index (CPI) is often used for this task; but several country studies show that it is a biased measure of such changes, leading to potentially inaccurate estimates of the rate of real income growth. This paper calculates CPI bias for urban Indonesia by estimating food Engel curves for households with the same level of CPI-deflated incomes at four different points in time between 1993 and 2008. The results suggest that CPI bias was negative during the 1997--98 crisis but has been positive since 2000. From 1993 to 2008, CPI bias averaged 4% annually, equivalent to almost one-third of the measured inflation rate.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Bulletin of Indonesian Economic Studies.
Volume (Year): 49 (2013)
Issue (Month): 1 (April)
Contact details of provider:
Web page: http://www.tandfonline.com/CBIE20
Other versions of this item:
- Susan Olivia & John Gibson, 2012. "Using Engel Curves to Measure CPI Bias for Indonesia," Working Papers in Economics 12/06, University of Waikato, Department of Economics.
- Susan Olivia & John Gibson, 2012. "Using Engel Curves to Measure CPI Bias for Indonesia," Monash Econometrics and Business Statistics Working Papers 13/12, Monash University, Department of Econometrics and Business Statistics.
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Is the Indonesian CPI an accurate measure of the cost of living?
by Susan Olivia in East Asia Forum on 2012-08-11 12:00:07
- Ingvild Almås & Anders Kjelsrud & Rohini Somanathan, 2013.
"A Behaviour-based Approach to the Estimation of Poverty in India,"
CESifo Working Paper Series
4122, CESifo Group Munich.
- Ingvild Almas & Anders Kjelsrud & Rohini Somanathan, 2013. "A Behaviour-Based Approach To The Estimation Of Poverty In India," Working papers 226, Centre for Development Economics, Delhi School of Economics.
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