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Scanner Data, Elementary Price Indexes and the Chain Drift Problem

In: Advances in Economic Measurement

Author

Listed:
  • W. Erwin Diewert

    (University of British Columbia
    University of New South Wales)

Abstract

Scanner data from retail outlets has allowed national statistical agencies to construct superlative indexes at the first stage of aggregation. However, if there are strong fluctuations in prices and quantities, chained indexes using scanner data will typically show strong trends which are too large to be credible. To control this chain drift problem, the chapter suggests the use of multilateral index formulae. The chapter compares all of the main multilateral index number formulae both from a theoretical perspective and illustrates the results using a scanner data set on sales of frozen juices for a retail outlet in Chicago. The chapter suggests a new multilateral method that is based on linking observations that have the most similar structure of relative prices and quantities.

Suggested Citation

  • W. Erwin Diewert, 2022. "Scanner Data, Elementary Price Indexes and the Chain Drift Problem," Springer Books, in: Duangkamon Chotikapanich & Alicia N. Rambaldi & Nicholas Rohde (ed.), Advances in Economic Measurement, chapter 0, pages 445-606, Springer.
    • Handle: RePEc:spr:sprchp:978-981-19-2023-3_11
    DOI: 10.1007/978-981-19-2023-3_11
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    Cited by:

    1. is not listed on IDEAS
    2. Diewert, Erwin, 2019. "Quality Adjustment and Hedonics: A Unified Approach," Microeconomics.ca working papers erwin_diewert-2019-2, Vancouver School of Economics, revised 14 Mar 2019.
    3. Erwin Diewert & Valentin Zelenyuk, 2025. "On the problem of the purchasing power of money by A. A. Konüs and S. S. Byushgens: translation and commentary," Journal of Productivity Analysis, Springer, vol. 63(2), pages 107-132, April.
    4. Abe, Naohito & 阿部, 修人 & Rao, D.S.Prasada, 2020. "Generalized Logarithmic Index Numbers with Demand Shocks: Bridging the Gap between Theory and Practice," RCESR Discussion Paper Series DP20-1, Research Center for Economic and Social Risks, Institute of Economic Research, Hitotsubashi University.
    5. Ludwig von Auer, 2024. "Inflation Measurement in the Presence of Stockpiling and Smoothing of Consumption," Research Papers in Economics 2024-02, University of Trier, Department of Economics.

    More about this item

    Keywords

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    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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