Substitution Biases in Price Indexes during Transition
The rapidly changing environment of the transition may create special problems for calculation of index numbers that require a fixed basket of goods and retail outlets. Using referent-level data we find that fixed- weight Laspeyres index on average overstated cost of living increases by approximately 5 per cent a year when compared with a superlative index in the Czech Republic. This difference is smaller than might be expected given the large changes in relative prices that occurred during transition and suggests that consumer substitution impacts may have been largely offset by other factors, especially rising prices combined with increased consumption of some goods as artificial shortages under communism were removed. Indeed, in the period of greatest supply response to price liberalization, the Laspeyres index appears to understate increases in the cost of living.
|Date of creation:||16 Jun 2003|
|Date of revision:|
|Note:||Type of Document - pdf; prepared on IBM PC ; to print on HP/PostScript; pages: 22 ; figures: included|
|Contact details of provider:|| Web page: http://188.8.131.52|
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.:
- Brent R. Moulton, 1996. "Bias in the Consumer Price Index: What Is the Evidence?," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 159-177, Fall.
- Filer, Randall K. & Hanousek, Jan, 2002.
"Survey-Based Estimates of Biases in Consumer Price Indices during Transition: Evidence from Romania,"
Journal of Comparative Economics,
Elsevier, vol. 30(3), pages 476-487, September.
- Jan Hanousek & Randall K. Filer, 2001. "Survey-based Estimates of Biases in Consumer Price Indices During Transition: Evidence from Romania," CERGE-EI Working Papers wp178, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
- Brada, Josef C. & King, Arthur E. & Kutan, Ali M., 2000. "Inflation bias and productivity shocks in transition economies: The case of the Czech Republic," ZEI Working Papers B 02-2000, ZEI - Center for European Integration Studies, University of Bonn.
- Jan Hanousek & Randall K. Filer, 2001.
"Consumers' Opinion of Inflation Bias Due to Quality Improvements in Transition in the Czech Republic,"
Development and Comp Systems
- Jan Hanousek & Randall K. Filer, 2001. "Consumers' Opinion of Inflation Bias Due to Quality Improvements in Transition in the Czech Republic," CERGE-EI Working Papers wp184, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
- 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.
- Paula De Masi & Vincent Koen, 1997. "Prices in Transition: Ten Stylized Facts," IMF Working Papers 97/158, International Monetary Fund.
- Mark A. Wynne & Fiona D. Sigalla, 1994. "The consumer price index," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q II, pages 1-22.
- Randall K. Filer & Jan Hanousek, 2001.
"Output Changes and Inflationary Bias in Transition,"
- Jan Hanousek & Randall K. Filer, 2000. "Output Changes and Inflationary Bias in Transition," CERGE-EI Working Papers wp167, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
- Triplett, Jack E, 2001. "Should the Cost-of-Living Index Provide the Conceptual Framework for a Consumer Price Index?," Economic Journal, Royal Economic Society, vol. 111(472), pages F311-34, June.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpdc:0306002. 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: (EconWPA)
If references are entirely missing, you can add them using this form.