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Measurement biases in the Canadian CPI: An update

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The consumer price index (CPI) is used to measure changes in the price level of consumer goods and services. As an indicator of changes in the cost of living, it is susceptible to various types of measurement biases. This article provides estimates of the size of these biases in the Canadian CPI. It concludes that the rate of increase in the CPI probably overstates the rate of increase in the cost of living by about 0.5 percentage points per year.

Suggested Citation

  • Allan Crawford, 1998. "Measurement biases in the Canadian CPI: An update," Bank of Canada Review, Bank of Canada, vol. 1998(Spring), pages 39-56.
  • Handle: RePEc:bca:bcarev:v:1998:y:1998:i:spring98:p:39-56
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    1. repec:ucp:bknber:9780226304557 is not listed on IDEAS
    2. Matthew D. Shapiro & David W. Wilcox, 1996. "Mismeasurement in the Consumer Price Index: An Evaluation," NBER Chapters,in: NBER Macroeconomics Annual 1996, Volume 11, pages 93-154 National Bureau of Economic Research, Inc.
    3. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1.
    4. Alastair Cunningham, 1996. "Measurement Bias in Price Indices: An Application to the UK's RPI," Bank of England working papers 47, Bank of England.
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    Cited by:

    1. David Laidler & William B.P. Robson, 2004. "Two Percent Target: The Context, Theory, and Practice of Canadian Monetary Policy since 1991," C.D. Howe Institute Policy Studies, C.D. Howe Institute, number 20041, January.
    2. Matthew Brzozowski, 2006. "Does One Size Fit All? The CPI and Canadian Seniors," Canadian Public Policy, University of Toronto Press, vol. 32(4), pages 387-412, December.
    3. Hammermann, Felix & Flanagan, Mark, 2007. "What Explains Persistent Inflation Differentials Across Transition Economies?," Kiel Working Papers 1373, Kiel Institute for the World Economy (IfW).
    4. Shiratsuka, Shigenori, 2001. "Is There a Desirable Rate of Inflation? A Theoretical and Empirical Survey," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 19(2), pages 49-83, May.
    5. Mark J Flanagan & Felix Hammermann, 2007. "What Explains Persistent Inflation Differentials Across Transition Economies?," IMF Working Papers 07/189, International Monetary Fund.
    6. Gaddis,Isis, 2016. "Prices for poverty analysis in Africa," Policy Research Working Paper Series 7652, The World Bank.
    7. Filer, Randall K. & Hanousek, Jan, 2003. "Inflationary bias in middle to late transition Czech Republic," Economic Systems, Elsevier, vol. 27(4), pages 367-376, December.
    8. Jacek Białek, 2014. "Application of the Original Price Index Formula to Measuring the CPI’s Commodity Substitution Bias," Statistics in Transition new series, Główny Urząd Statystyczny (Polska), vol. 15(1), pages 83-96, January.
    9. Randall K. Filer & Jan Hanousek, 2003. "Inflationary Bias in Mid to Late Transition Czech Republic," Development and Comp Systems 0306001, EconWPA.
    10. Philippe Bergevin & William B.P. Robson, 2011. "The Costs of Inflexible Indexing: Avoiding the Adverse Fiscal Impacts of Lower Inflation," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 322, February.
    11. Jacek Białek, 2014. "Pomiar obciążenia wskaźnika cen towarów i usług konsumpcyjnych," Gospodarka Narodowa, Warsaw School of Economics, issue 3, pages 63-80.
    12. Felix Hammermann & Mark Flanagan, 2009. "What explains persistent inflation differentials across transition economies?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(2), pages 297-328, April.
    13. Parkhomenko, Alexander & Redkina, Anastasia, 2006. "Эконометрические Оценки Гедонических Индексов Цен На Персональные Компьютеры В России: Пример Рынка Г. Екатеринбурга
      [Estimating Hedonic Price Indices for Personal Computers in Russia]
      ," MPRA Paper 1506, University Library of Munich, Germany, revised 07 Nov 2006.
    14. Agnieszka Leszczynska & Aleksandra Halka, 2012. "What does the Consumer Price Index Measure? Bias Estimates for Poland," EcoMod2012 4370, EcoMod.
    15. Kevin Clinton, 2006. "Wicksell at the Bank of Canada," Working Papers 1087, Queen's University, Department of Economics.

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