This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Are Engel Curve Estimates of CPI Bias Biased?

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Trevon D. Logan

Additional information is available for the following registered author(s):

Abstract

A recent literature has advanced the use of Engel curves to estimate overall CPI bias. In this paper, I show that the methodology is sensitive to the modeling of household demography. Existing estimates of CPI bias do not account for the changing effect of household size on budget shares, and this can lead to omitted variable bias. Since the effect of household size on demand changes over time the drift in Engel curves attributed to CPI bias is partially explained by this effect. My estimates of the annual rate of CPI bias from 1888 to 1935 are changed by at least 25%, and usually more than 50%, once the changing effect of household size is accounted for.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.nber.org/papers/w13870.pdf
File Format: application/pdf
File Function:
Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13870.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:nbr:nberwo:13870

Note: DAE EFG
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords:

Other versions of this item:

Find related papers by JEL classification:
D1 - Microeconomics - - Household Behavior
E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
J1 - Labor and Demographic Economics - - Demographic Economics
N3 - Economic History - - Labor and Consumers, Demography, Education, Income, and Wealth

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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.:
  1. Pollak, Robert A, 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. [Downloadable!] (restricted)
  2. Pollak, Robert A & Wales, Terence J, 1979. "Welfare Comparisons and Equivalence Scales," American Economic Review, American Economic Association, vol. 69(2), pages 216-21, May. [Downloadable!] (restricted)
  3. Pollak, Robert A & Wales, Terence J, 1980. "Comparison of the Quadratic Expenditure System and Translog Demand Systems with Alternative Specifications of Demographic Effects," Econometrica, Econometric Society, vol. 48(3), pages 595-612, April. [Downloadable!] (restricted)
  4. Nelson, Julie A, 1988. "Household Economies of Scale in Consumption: Theory and Evidence," Econometrica, Econometric Society, vol. 56(6), pages 1301-14, November. [Downloadable!] (restricted)
  5. Lewbel, Arthur, 1985. "A Unified Approach to Incorporating Demographic or Other Effects into Demand Systems," Review of Economic Studies, Blackwell Publishing, vol. 52(1), pages 1-18, January. [Downloadable!] (restricted)
  6. Jerry Hausman, 2003. "Sources of Bias and Solutions to Bias in the Consumer Price Index," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 23-44, Winter. [Downloadable!] (restricted)
  7. John Gibson & Steven Stillman & Trinh Le, 2004. "CPI Bias and Real Living Standards in Russia During the Transition," Working Papers in Economics 04/02, University of Waikato, Department of Economics. [Downloadable!]
    Other versions:
  8. Richard W. Blundell & Martin Browning & Ian A. Crawford, 2003. "Nonparametric Engel Curves and Revealed Preference," Econometrica, Econometric Society, vol. 71(1), pages 205-240, January. [Downloadable!] (restricted)
    Other versions:
  9. Dora L. Costa, 1999. "American Living Standards: Evidence from Recreational Expenditures," NBER Working Papers 7148, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Trevon D. Logan, 2008. "Economies of Scale in the Household: Puzzles and Patterns from the American Past," NBER Working Papers 13869, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Angus Deaton & Christina Paxson, 1998. "Economies of Scale, Household Size, and the Demand for Food," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 897-930, October. [Downloadable!] (restricted)
    Other versions:
  12. Marcos Chamon & Irineu E. Carvalho Filho, 2008. "The Myth of Post-Reform Income Stagnation: Evidence from Brazil and Mexico," IMF Working Papers 08/197, International Monetary Fund. [Downloadable!]
  13. Li Gan & Victoria Vernon, 2003. "Testing the Barten Model of Economies of Scale in Household Consumption: Toward Resolving a Paradox of Deaton and Paxson," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1361-1377, December. [Downloadable!] (restricted)
  14. Marcos Chamon & Irineu de Carvalho Filho, 2006. "The Myth of Post-Reform Income Stagnation in Brazil," IMF Working Papers 06/275, International Monetary Fund. [Downloadable!]
  15. Timothy Beatty & Erling Røed Larsen, 2005. "Using Engel curves to estimate bias in the Canadian CPI as a cost of living index," Canadian Journal of Economics, Canadian Economics Association, vol. 38(2), pages 482-499, May. [Downloadable!] (restricted)
  16. Bruce W. Hamilton, 2001. "Using Engel's Law to Estimate CPI Bias," American Economic Review, American Economic Association, vol. 91(3), pages 619-630, June. [Downloadable!] (restricted)
  17. Pollak, Robert A, 1980. "Group Cost-of-Living Indexes," American Economic Review, American Economic Association, vol. 70(2), pages 273-78, May. [Downloadable!] (restricted)
Full references

Statistics
Access and download statistics

Did you know? All bibliographic data on IDEAS has been put in the public domain by the publishers.

This page was last updated on 2009-11-25.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.