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Plutocratic and Democratic Consumer Price Indexes: an Estimation of a Democratic Index for Italy 1995-2005

Author

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  • Francesco CHELLI

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

  • Elvio MATTIOLI

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

Abstract

The consumer price indexes for the entire country and those for individual households are weighted arithmetic averages of relative prices, and they differ essentially in terms of their weighting systems. Whereas the former use the proportions of total expenditure on goods and services, the latter use the proportions of expenditure by each household. In the usual calculation of the index for the entire country, each household contributes to determining the national index with a weight proportional to its expenditure. In other words, the households that spend more - that is, the wealthier ones - are represented in calculation of the national index to a greater extent, and this explains why the latter is termed the 'plutocratic index'. In contraposition to plutocratic indexes are the 'democratic' ones in which the same weight is assigned to each household.;The paper presents a first estimation of the democratic price indexes for Italy in the period 1995-2002. The results show significant differences between the two calculation methods.

Suggested Citation

  • Francesco CHELLI & Elvio MATTIOLI, 2007. "Plutocratic and Democratic Consumer Price Indexes: an Estimation of a Democratic Index for Italy 1995-2005," Working Papers 285, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    • Handle: RePEc:anc:wpaper:285
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    References listed on IDEAS

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    1. W. Erwin Diewert, 2002. "Harmonized Indexes of Consumer Prices: Their Conceptual Foundations," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 138(IV), pages 547-637, December.
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    Cited by:

    1. Elena AMBROSETTI & Eralba CELA & Tineke FOKKEMA, 2011. "The Remittances Behaviour of the Second Generation in Europe: Altruism or Self-Interest?," Working Papers 368, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

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    More about this item

    Keywords

    consumer price indexes; inflation; plutocratic and democratic indexes; price policy;
    All these keywords.

    JEL classification:

    • 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
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy

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