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Measurement Bias in the Canadian Consumer Price Index

Author

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  • James Rossiter

Abstract

The consumer price index (CPI) is the most commonly used measure of inflation in Canada. As an indicator of changes in the cost of living, however, the CPI is subject to various types of measurement bias. The author updates previous Bank of Canada estimates of the bias in the Canadian CPI by examining four different sources of potential bias. He finds that the total measurement bias has increased only slightly in recent years to 0.6 percentage points per year, and is low when compared with other countries.

Suggested Citation

  • James Rossiter, 2005. "Measurement Bias in the Canadian Consumer Price Index," Staff Working Papers 05-39, Bank of Canada.
  • Handle: RePEc:bca:bocawp:05-39
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    File URL: http://www.bankofcanada.ca/wp-content/uploads/2010/02/wp05-39.pdf
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    References listed on IDEAS

    as
    1. Erwin Diewert & Denis Lawrence, 1999. "Measuring New Zealand’s Productivity," Treasury Working Paper Series 99/05, New Zealand Treasury.
    2. W. Erwin Diewert, 1998. "Index Number Issues in the Consumer Price Index," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 47-58, Winter.
    3. 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.
    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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Oleg KITOV & Ivan KITOV, 2012. "A Win-Win Monetary Policy In Canada," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 6(6(18)/ Su), pages 160-176.
    2. repec:eso:journl:v:47:y:2016:i:3:p:327-337 is not listed on IDEAS
    3. Christopher Ragan, 2011. "Fixing Canada’s CPI: A Simple and Sensible Policy Change for Minister Flaherty," e-briefs 111, C.D. Howe Institute.
    4. Gaddis,Isis, 2016. "Prices for poverty analysis in Africa," Policy Research Working Paper Series 7652, The World Bank.
    5. Oleksiy Kryvtsov, 2016. "Is there a quality bias in the Canadian CPI? Evidence from microdata," Canadian Journal of Economics, Canadian Economics Association, vol. 49(4), pages 1401-1424, November.
    6. Robson, William, 2006. "Accounting for and Thinking about Social Security Liabilities in Canada," Discussion Paper 285, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.

    More about this item

    Keywords

    Inflation et prix; Cibles en matière d'inflation;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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