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What a Consumer Price Index Can’t Do


  • Ralph Turvey


A monthly consumer price index traces changes in the monthly cost of a year’s consumption using a sample of prices. But in some months the prices that can be sampled will temporarily exclude some of the products that were bought in the base year, Christmas trees providing a textbook example. Worse still, it becomes permanently impossible to observe prices for sampled products that have been completely superseded. There are methods for dealing with these two problems, but they leave serious and irremediable defects in the index.

Suggested Citation

  • Ralph Turvey, 2004. "What a Consumer Price Index Can’t Do," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 5(3), pages 37-42, July.
  • Handle: RePEc:wej:wldecn:179

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    References listed on IDEAS

    1. Fearon, James D., 1995. "Rationalist explanations for war," International Organization, Cambridge University Press, vol. 49(03), pages 379-414, June.
    2. Akerlof, George A, 1991. "Procrastination and Obedience," American Economic Review, American Economic Association, vol. 81(2), pages 1-19, May.
    3. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
    4. Albert Breton & Gianluigi Galeotti & Pierre Salmon & Ronald Wintrobe, 1995. "Nationalism and Rationality," Post-Print hal-00445587, HAL.
    5. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    6. repec:cup:apsrev:v:87:y:1993:i:03:p:567-576_10 is not listed on IDEAS
    7. Wintrobe,Ronald, 1998. "The Political Economy of Dictatorship," Cambridge Books, Cambridge University Press, number 9780521583299, March.
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