The substitution bias of the consumer price index
The paper uses elementary consumer theory to propose an inflation independent ratio definition of the substitution bias of the Laspeyres consumer price index, and derives an approximate substitution bias which depends on the size of the price change as measured by a norm in the Laspeyres plane and on the elasticity of substitution in the direction of the price change. This norm or distance measure can be interpreted as a price substitution index which yields useful information about the movements of relative prices. Norwegian CPI data are used to quantify these relationships.
|Date of creation:||Mar 2006|
|Contact details of provider:|| Postal: P.O.Box 8131 Dep, N-0033 Oslo, Norway|
Phone: (+47) 21 09 00 00
Fax: +47 - 62 88 55 95
Web page: http://www.ssb.no/en/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tran, Van Hoa, 1969. "Additive Preferences and Cost of Living Indexes: An Empirical Study of the Australian Consumer's Welfare," The Economic Record, The Economic Society of Australia, vol. 45(111), pages 432-440, September.
- Matthew D. Shapiro & David W. Wilcox, 1997.
"Alternative strategies for aggregating prices in the CPI,"
Federal Reserve Bank of St. Louis, issue May, pages 113-125.
- Matthew D. Shapiro & David W. Wilcox, 1997. "Alternative Strategies for Aggregating Prices in the CPI," NBER Working Papers 5980, National Bureau of Economic Research, Inc.
- Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
- Lloyd, P J, 1975. "Substitution Effects and Biases in Nontrue Price Indices," American Economic Review, American Economic Association, vol. 65(3), pages 301-313, June.
- E. T. McPHEE., 1928. "Notes," The Economic Record, The Economic Society of Australia, vol. 4(1), pages 92-95, 05.
- 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.
- Goldberger, Arthur S. & Gamaletsos, Theodore, 1970. "A cross-country comparison of consumer expenditure patterns," European Economic Review, Elsevier, vol. 1(3), pages 357-400.
- Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, October. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ssb:dispap:451. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (L MaasÃ¸)
If references are entirely missing, you can add them using this form.