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Biases in cross-spave comparisons through cross-time price indexes : the case of Russia

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  • Gluschenko, Konstantin

Abstract

Lacking data on price levels across locations (countries, national regions, etc.) for crossspace comparisons, researchers resort to local consumer price indexes (CPIs) over time to evaluate these levels.This approach unfortunately fails to specify, even generally, the exactness of such proxies.Worse, the method is silent on whether the results are consistent, at least qualitatively, with those obtained using actual price levels.This paper aims to find an answer empirically, using data across Russian regions.Through comparison of CPIproxied price levels with direct evaluations of regional price levels (i.e.Surinov spatial price indexes and the costs of a purchasing power basket), biases that distort the qualitative pattern of inter-regional differences are identified.Cross-region distributions for real income (calculated with CPI-proxied and directly evaluated price levels) for several points in time are estimated and compared.The CPI-induced biases are found to generally overstate inter-regional disparities. JEL Classification: C43, E31, P22, R19 Keywords: consumer price index, spatial price index, real income, nonhomothetic preferences, Russia, Russian regions

Suggested Citation

  • Gluschenko, Konstantin, 2006. "Biases in cross-spave comparisons through cross-time price indexes : the case of Russia," BOFIT Discussion Papers 9/2006, Bank of Finland, Institute for Economies in Transition.
  • Handle: RePEc:bof:bofitp:2006_009
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    References listed on IDEAS

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    1. Miguel-Angel Martín & Agustín Herranz, 2004. "Human capital and economic growth in Spanish regions," International Advances in Economic Research, Springer;International Atlantic Economic Society, pages 257-264.
    2. repec:kap:iaecre:v:10:y:2004:i:4:p:257-264 is not listed on IDEAS
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    Cited by:

    1. Arne Melchior, 2008. "Regional Inequality and Convergence in Europe, 1995-2005," CASE Network Studies and Analyses 0374, CASE-Center for Social and Economic Research.
    2. Almås, Ingvild & Johnsen, Åshild Auglænd, 2012. "The cost of living in China: Implications for inequality and poverty," Discussion Paper Series in Economics 21/2012, Department of Economics, Norwegian School of Economics.
    3. Chao Li & John Gibson, 2014. "Spatial Price Differences and Inequality in the People's Republic of China: Housing Market Evidence," Asian Development Review, MIT Press, vol. 31(1), pages 92-120, March.
    4. Gluschenko, Konstantin & Karandashova, Maria, 2016. "Price Levels across Russian Regions," MPRA Paper 75041, University Library of Munich, Germany.
    5. Zaytsev, Alexander, 2014. "Оценка Догоняющего Развития На Уровне Стран И Регионов: Методический Комментарий
      [Assessing the catching-up on country and regional level: methodological comments]
      ," MPRA Paper 57375, University Library of Munich, Germany.
    6. Konstantin GLUSCHENKO, 2016. "The Path-Dependence Bias in Approximating Local Price Levels by CPIs," Journal of Economics Library, KSP Journals, vol. 3(1), pages 69-76, March.
    7. K.P. Glushchenko (glu@ieie.nsc.ru), 2010. "Methodologies of analyzing inter-regional income inequalities," Journal "Region: Economics and Sociology", Institute of Economics and Industrial Engineering of Siberian Branch of RAS, vol. 1.
    8. Chao Li & John Gibson, 2013. "Spatial Price Differences and Inequality in China: Housing Market Evidence," Working Papers in Economics 13/06, University of Waikato.
    9. Gvozdeva, Margarita & Kazakova, Maria, 2017. "Review of Theory and Practice of Analysis of Interregional Inequality," Working Papers 041702, Russian Presidential Academy of National Economy and Public Administration.
    10. Arne Melchior, 2009. "East-West Integration and the Economic Geography of Europe," CASE Network Studies and Analyses 0379, CASE-Center for Social and Economic Research.
    11. Vera Ivanova, 2015. "The well-being of Russian cities: does location matter?," ERSA conference papers ersa15p956, European Regional Science Association.
    12. Konstantin Gluschenko, 2010. "Methodologies of Analyzing Inter-Regional Income Inequality and Their Applications to Russia," William Davidson Institute Working Papers Series wp984, William Davidson Institute at the University of Michigan.

    More about this item

    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
    • P22 - Economic Systems - - Socialist Systems and Transition Economies - - - Prices
    • R19 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Other

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