Showing papers on "Consumer price index published in 1994"
TL;DR: In this article, the authors explain the theory of cost-of-living indices and demonstrate how new goods should be included using the classical theory of Hicks and Rothbarth and demonstrate that the increase in consumer welfare is only 85% as high with perfect competition so CPI for cereal would still be 20% too high.
Abstract: The Consumer Price Index (CPI) attempts to answer the question of how much more (or less) income does a consumer require to be as well off in period 1 as in period 0 given changes in prices, changes in the quality of goods, and the introduction of new goods (or the disappearance of existing goods) In this paper I explain the theory of cost-of-living indices and demonstrate how new goods should be included using the classical theory of Hicks and Rothbarth The correct price to use for the good in the pre-intro- duction period is a `virtual' price which sets demand to zero Estimation of this virtual price requires estimation of a demand function which in turn provides the expenditure function which allows exact calucation of the cost of living index The data requirements and need to specify and estimate a demand function for a new brand among many existing brands requires extensive data and some new econometric methods which may have proven obstacles to the inclusion of new goods in the CPI up to this point As an example I use the introduction of a new cereal brand by General Mills in 1989-Apple Cinnamon Cheerios I find the virtual price is about 2 times the actual price of Apple Cinnamon Cheerios and that increase in consumer surplus is substantial Based on some simplifying approximations, I find that CPI may be overstated for cereal by about 25% because of its neglect of the effect of new brands When I take imperfect competition into account I find that the increase in consumer welfare is only 85% as high with perfect competition so CPI for cereal would still be 20% too high
196 citations
Posted Content•
TL;DR: In this article, the authors examine the discrepancies that arise between the CPI and the true cost-of-living index as a result of improvements in the quality of goods, the introduction of new goods, substitution on the part of consumers between different goods and retail outlets, and the difficulty of measuring the prices actually paid by consumers for the goods they purchase.
Abstract: The consumer price index (CPI) is probably the most closely watched indicator of inflation in the U.S. economy. In this article, Mark Wynne and Fiona Sigalla explain the construction of the CPI and evaluate some of its potential shortcomings as a measure of inflation. Specifically, they examine the discrepancies that arise between the CPI and the true cost- of-living index as a result of improvements in the quality of goods, the introduction of new goods, substitution on the part of consumers between different goods and retail outlets, and the difficulty of measuring the prices actually paid by consumers for the goods they purchase. ; The authors review the literature that quantifies these discrepancies, with the objective of estimating the magnitude of the overall bias in the CPI. Wynne and Sigalla argue that, in fact, remarkably little is known about the extent or significance of the overall bias in the CPI. They conclude that biases in the CPI cause it to overstate inflation by no more than 1 percent a year, and probably less.
132 citations
TL;DR: This article investigated the evidence for the use of consumer price indices (CPI) for tourism prices, employing a variety of methods and data, and found that tourism prices move in close concert with general consumer prices.
125 citations
TL;DR: In this paper, the authors discuss the issues involved and describes what the World Bank is doing about them, concluding that the inconsistencies are due to a combination of factors ranging from intractable index number problems, problems associated with compiling inter-temporal indices and those related to measurement of inter-spatial indices.
35 citations
TL;DR: This article developed a regional price index for Cote d'Ivoire building on the strengths of two independent data sources: the Cote D'Ivolire Living Standards Survey (CILSS) and the International Comparisons Project (ICP).
Abstract: The authors report on an exercise in economic statistics. They develop a regional price index for Cote d'Ivoire building on the strengths of two independent data sources: the Cote d'Ivoire Living Standards Survey (CILSS) and the International Comparisons Project (ICP). The CILSS collected detailed information on household incomes, spending, employment, and so on, but its coverage of prices left much to be desired. The ICP collected a wealth of information on prices across the country, but collected no information on household spending patterns or other socioeconomic data. The authors bring together these two sources to produce a regional price index that they argue is superior to previous estimates based solely on the Living Standards Survey. The procedures they follow should be of interest to practitioners faced with similar data shortcomings, particularly when working on Africa. They show this to be no mere statistical exercise. Using the new price index can have a significant effect on earlier evaluations of poverty in Cote d'Ivoire. They also use the new price information to construct disaggregated indices by commodity category and by poverty group.
33 citations
TL;DR: Differences in the distributions of out-of-pocket expenditures for hospital services, physician services, services by other practitioners, lab tests and x-ray services, nursing services, eye glasses and contact lenses, dental services, prescription medicines are explored.
Abstract: The 1987 National Expenditure Survey was conducted by the Agency for Health Care Policy and Research, USPHS to provide an assessment of the health care utilization, expenditures, sources of payment and health coverage of the civilian noninstitutional population. The Consumer Expenditure Survey (CEX) is sponsored by the Bureau of Labor Statistics and provides a continuous and comprehensive flow of data on the buying habits of consumers though the collection of information on the expenditures, income, and socio-demographic characteristics of customer units. It is designed to support Consumer Price Index revisions and social and economic analyses. Differences in family out-of-pocket expenditures for hospital services, physician services, services by other practitioners, lab tests and x-ray services, nursing services, eye glasses and contact lenses, dental services, prescription medicines are compared. Differences in the distributions of these expenditures are explored as are the association of differences with population characteristics.
7 citations
31 Jul 1994
TL;DR: The authors found that real wages were more flexible than generally supposed, which would support adjustment; labor reallocation across sectors has been more or less in the desired direction; and labor market institutions such as unions and minimum wages, often argued to be an obstacle to adjustment, have more subtle effects on the workings of labor market.
Abstract: This volume is one of two volumes resulting from a large research project undertaken by the Economic Development Institute of the World Bank. This volume includes twelve case studies that examine the effects of adjustment on labour markets in developing countries. They cover a wide geographic range: Latin America (Republic of Korea, Malaysia, and Thailand); North Africa and the Middle East (Egypt); and sub-Saharan Africa (Cote d'Ivoire, Ghana, and Kenya). Policymakers and international institutions seem to believe that labor market rigidities are an obstacle to structural adjustment, and several developing countries have implemented rather draconian policies to regulate their labor markets. However, few empirical studies exist to justify such policies. This research suggests that labor markets in developing countries have in fact been working quite well to permit structural adjustment. Three important conclusions are reached: 1) real wages were more flexible than generally supposed, which would support adjustment; 2) labor reallocation across sectors has been more or less in the desired direction; and 3) labor market institutions such as unions and minimum wages, often argued to be an impediment to adjustment, have more subtle effects on the workings of labor market.
7 citations
01 Jan 1994
TL;DR: Evidence indicates that market forces are beginning to exert an influence on the health care sector of the economy and regardless of what final form health care reform will take, the role of managed care will probably continue to increase.
Abstract: During 1993, an estimated $910 billion was spent on health care in the United States. Health care expenditures, as a whole, continued to show a slower rate of growth in 1993 than in 1992. The medical care Consumer Price Index rose 6.0 percent in 1993 and is projected to increase only about 5.7 percent in 1994. HMO enrollment increased 7.3 percent between 1991 and 1992, with an estimated 41.4 million participants. In terms of per capita spending, health care expenditures in the United States are more than twice the average for the 24 industrial nations that make up the Organization for Economic Cooperation and Development (OECD). As the health care reform debates continue, evidence indicates that market forces are beginning to exert an influence on the health care sector of the economy. Further, regardless of what final form health care reform will take, the role of managed care will probably continue to increase.
5 citations
3 citations
2 citations
Journal Article•
TL;DR: In 1995, the Federal Energy Regulatory Commission (FERC) issued a Final Rule in Order 561, which created a price-cap index to regulate oil pipeline rates as discussed by the authors.
Abstract: On October 22, 1993, the Federal Energy Regulatory Commission (FERC) issued a Final Rule in Order 561, which creates a price-cap index to regulate oil pipeline rates This index, effective July 1, 1995, will allow oil pipeline rates to increase at one percentage point below the rate of inflation, as measured by the Producer Price Index for Finished Goods
TL;DR: In this article, the usefulness of the consumer price index (CPI) as a tool for updating and forecasting income and house values in small geographic market areas is explored, and the accuracy of such employment is examined statistically with census tracts in the metropolitan Atlanta area.
Abstract: The usefulness of the consumer price index (CPI) as a tool for updating and forecasting income and house values in small geographic market areas is explored in this paper. The topic is introduced by briefly discussing the construction of the CPI and its traditional use as an updating index. The accuracy of such employment is examined statistically with data from 191 census tracts in the metropolitan Atlanta area. For the data set examined, use of the CPI for updating both income and house values is associated with significant and systematic error and bias calling into question its appropriateness.