Showing papers on "Consumer price index published in 2000"

Measuring Regional Cost of Living

Abstract: Accurate measures of regional cost of living are vital to businesses and individuals. We compare a commonly used regional cost-of-living index, produced by the American Chamber of Commerce Research Association (ACCRA), to an index we calculate using Consumer Price Index data and research from Kokoski, Cardiff, and Moulton. We find significant differences between the ACCRA and the new indexes that are likely due to theoretical design, data collection, and sampling design. The comparison of these indexes highlights sources of differences in regional cost-of-living measures and suggests caution in the use of ACCRA indexes.

The Evolution of Poverty during the Crisis in Indonesia, 1996–99

Abstract: The relative price of food increased considerably during Indonesia's recent economic crisis, so the explicit (or implicit) choice of the weight given to the inflation rate for food prices dramatically affects calculations of the poverty rate. Poverty is intrinsically a complex social construct, and even when it is narrowly defined by a deficit of consumption spending, many thorny issues arise in setting an appropriate poverty line. Suryahadi, Sumarto, Suharso, and Pritchett limit themselves to examining how poverty - defined on a consistent, welfare-comparable basis - changed in Indonesia during a series of crises that began in August 1997. Using various data sets and studies, they develop a consistent series on poverty's evolution from February 1996 to August 1999. Specifically, they study the appropriate method for comparing changes in poverty between the February 1996 and February 1999 Susenas surveys. To set a poverty line for 1999 that is conceptually comparable to that for 1996 involves a standard issue of price deflation: How much would it cost in 1999 to purchase a bundle of goods that would produce the same level of material welfare as the money spent at the poverty line in 1996? Empirically, given major changes in the relative prices of food, the key issue is the weight given food prices in the price index. Using different deflators produces a range of plausible estimates, but they produce two base cases: one working forward from 1996 and one working backward from 1999. If one accepts the official figure of 11.34 percent for February 1996, poverty increased from the immediate pre-crisis rate of about 7-8 percent in the second half of 1997 to the post-crisis rate of about 18-20 percent by September 1998 and 18.9 percent in February 1999. If one begins from the best estimate of the poverty rate in February 1999 (27.1 percent), poverty rose by 9.6 percentage points from 17.5 percent in February 1996. Since February 1999, poverty appears to have subsided considerably but - two years after the crisis started - is still substantially higher than it was immediately before the crisis. This paper - a product of the Environment and Social Development Sector Unit, East Asia and Pacific Region - is part of a larger effort in the region to develop a national poverty strategy for Indonesia. Lant Pritchett may be contacted at lant_pritchett@harvard.edu.

Causes of Repressed Inflation in the Soviet Consumer Market: Retail Price Subsidies, the Siphoning Effect, and the Budget Deficit

Abstract: Using recently available Soviet material, this paper analyses the causes of repressed inflation in the Soviet consumer market during 1965-1989. We found that retail price subsidies, which rose from 4% of state budget expenditure in 1965 to 20% in the late 1980s, intensified consumer market disequilibrium. The provision of these subsidies had negative effects on the market by maintaining the purchasing power of households for consumer goods and by increasing the budget deficit. Furthermore, the demand of enterprises for consumer goods without legitimate permission tended to increase during 1965-1989.

Do the Poor Pay More? An Empirical Investigation of PriceDispersion in Food Retailing

Abstract: On the question of whether prices are higher in poor, urban neighborhoods, the prior research is decidedly mixed. This paper revisits the question by analyzing unpublished price-level data collected by the Bureau of Labor Statistics for construction of the Consumer Price Index. Using this large, statistically representative sample of stores in poor and affluent neighborhoods, I first estimate if a price difference exists. I then empirically test the major arguments in support of disparate prices such as differences in quality, operating and consumer search costs. I also explore the relationship between pricing strategies and the racial and ethnic composition of poor neighborhoods. I find that market prices are up to 6 percent less in poor neighborhoods after controlling for a variety of covariates. In addition, I find that poor, predominantly white and Hispanic neighborhoods experience significant discounts, while market prices in poor, predominantly black neighborhoods are comparable to those in affluent white areas.

Variable-Rate State Gasoline Taxes

Abstract: Inflation and increased fuel economy have reduced the buying power of the revenues collected from state and federal motor fuel taxes Because fuel taxes are almost always collected on a per-gallon basis, in most states they must be raised by specific acts of the legislature and it is becoming increasingly difficult to find the political support necessary to raise them A number of states have experimented with fuel taxes that adjust automatically by being indexed to the price of gasoline, to the consumer price index, or to some indicator of highway construction and maintenance costs This paper reviews experience with indexed motor fuel taxes in the United States, and finds that in many cases indexed taxes have failed to produce the anticipated results because declines in fuel prices often cause declines in indexed fuel taxes Indexing gas tax rates to the Consumer Price Index appears to be the best way of insuring that fuel tax revenues keep pace with inflation Fuel taxes are the mainstay of transportation finance in the United States The federal government and every state levy taxes on gasoline and diesel fuel Motor fuel taxes have much to recommend them fiscally, politically, and administratively First and foremost, as a user fee this tax is widely regarded to be inherently fair It can be assumed that we benefit from the transportation system in proportion to the extent to which we use it, and motor fuel taxes charge us roughly in proportion to our use of the road and highway system Furthermore, the tax is paid by motorists in small increments and is relatively hidden in the sales price of motor fuel This has tended to minimize organized public opposition to it The tax is also easy to administer and collect from both the taxpayer's and the government's point of view The motor fuel tax is usually collected from fuel distributors rather than from retailers or consumers This minimizes opportunities for evasion and reduces the cost of collection to an historical average of one-half of one percent of tax proceeds By contrast, prior to the advent of electronic toll collection, highway tolls could often involve collection and administrative costs that amounted to as much as twenty percent of the proceeds As motor fuel consumption has soared over the past eight decades, so have tax proceeds, enabling users of the nation's highway system to finance its construction and maintenance

The Effect of the Harmonized Sales Tax on Consumer Prices in Atlantic Canada

Abstract: This paper examines the effect of the Harmonized Sales Tax (HST) on consumer prices for the three participating Atlantic Canada provinces from April 1997 to March 1999 Using aggregate and disaggregate (eight-components) consumer price index (CPI) data, we conduct counter-factual analysis and find that, ceteris paribus, while the consumer price index for overall items fell slightly during the first two years of the HST, the change in the components of the CPI varies substantially from one category to another

The Use of Hedonic Regressions to Handle Quality Change: The Experience in the U.S. CPI

Abstract: A consumer price index (CPI) is a measure of average change over time in the prices of the goods and services that households purchase to satisfy their needs and wants One of the fundamental problems that the producers of CPIs face is that the characteristics of goods and services, not just their prices, change over time In this paper we describe the efforts by the US Bureau of Labor Statistics to capture the impact of changing characteristics on measured price change Hedonic quality adjustment, excluding the case of shelter, is now employed in item categories comprising approximately 29 percent of the CPI The product cateogries currently being evaluated for potential expansion could increase this total by approximately 03 percent Introduction: Hedonic Quality Adjustment and New Goods A consumer price index (CPI) is a measure of average change over time in the prices of the goods and services that households purchase to satisfy their needs and wants One of the fundamental problems that the producers of CPIs face is that the characteristics of goods and services, not just their prices, change over time If prices were the only aspect of consumer items that changed, producing a CPI that accurately measured price change would be much more straightforward The non-price aspects of consumer goods and services, often referred to as “quality characteristics”, can change in various ways We can make some (perhaps not-veryuseful) distinctions among them There are: • Old consumer items that change—for example, by adding new features or improving performance, • New consumer items that perform the same function as the old ones but in a better (or at least novel) way, and • Completely new, never-before-seen, consumer items that satisfy a consumer need or want that has never been satisfied before The new items may, fairly soon after their arrival, drive old ones from the marketplace, or the old and new items may coexist We can lump all these cases together and speak of a single issue for CPIs, which we call the new goods problem That is, the problem of changing product characteristics, or the quality change problem, is fundamentally indistinguishable from the new goods problem Just as there are several ways that new goods can appear, there are several ways that ignoring the arrival of new goods may harm a CPI First, the new goods may add to the product options available to consumers If there is a “value of variety,” there will be

Outlet types and the Canadian Consumer Price Index

Abstract: Recent phenomenal growth in popularity of large warehouse/discount stores has important implications for price measurement. Consumer substitution to such outlets could produce a bias in consumer price indexes (CPIs), which may be exacerbated by unrepresentative sampling and discount outlets’ apparent slower rates of price increases. It is shown that in 1990-96 unit value indexes rose at a lower rate than the corresponding Canadian CPI subaggregate indexes for other household equipment, non-prescribed medicines, and audio equipment, and biases arising from unrepresentative sampling and differential rates of price increases across outlets have resulted in an additional overstatement for these subaggregates. La croissance dans la popularite des magasins/entrepots a forts escomptes au cours des der;chnieres annees a ete fort importante et a eu des effets importants sur la mesure des prix. Le comportement du consommateur qui choisit ces magasins pourrait entrainer un biais dans la mesure des indices de prix a la consommation. Un echantillonage non representatif et le fait que ces magasins semblent avoir des augmentations de prix plus faibles dans le temps peuvent biaiser encore plus les indices. Cette recherche montre que entre 1990 et 1996 les indices de la valeur unitaire ont cru a un taux plus faible que les indices correspondant de prix a la consommation pour des sous-agregats comme autre ´equipement des menages, medicaments non-prescrit, et ´equipement audio. Il semble que les biais engendres par les differentiels de croissance des prix entre magasins et un echantillonnage non representatif se soient traduits par un biais a la hausse dans ces sous-agregats

Does rising consumer debt signal future recessions?: Testing the causal relationship between consumer debt and the economy

Abstract: This paper examines the relationship between measures of the consumer debt burden and various economic indicators. The consumer loan delinquency rate is useful in predicting consumer spending on durable goods and retail sales, while various economic indicators are useful in predicting the ratio of consumer installment credit to disposable income. The results provide no evidence for the hypothesis that a rising consumer debt burden signals any slowdown in the growth of consumer spending and the economy. Instead, the results indicate that rising consumer indebtedness is a normal occurrence in an economic expansion. It remains to be seen whether innovations in credit card usage, along with the growing use of substitutes for traditional consumer loans, will have an impact on the causal relationship between consumer debt and the economy.

Economic Analysis of Production Price Indexes

Abstract: Preface 1. Introduction 2. Principles of price and quantity measurement: ouputs 3. Comparative statics: outputs 4. Principles of price and quantity measurement: inputs 5. Comparative statics: inputs 6. Aggregation Appendix References.

The Seasonal Adjustment of the Harmonised Index of Consumer Prices for the Euro Area: a Comparison of Direct and Indirect Methods

Abstract: Knowledge of the characteristics of the short-term evolution of consumer prices for each country and for their average is important for better monitoring and forecasting of inflation in the euro area. In this paper we seek to verify to what extent the short-term variability of the HICPs can be explained by regular infra-year movements which we then attempt to estimate. We find evidence that seasonal movements characterise most price series, though some differences arise across countries and sub-indices. The seasonal adjustment of these indices raises a number of important questions of aggregation.

On the Efficiency of Internet Markets for Consumer Goods

Abstract: Despite claims that electronic commerce lowers search costs dramatically, and therefore makes it easy for consumers to spot the best buy, empirical studies have found a substantial degree of price dispersion in electronic markets for consumer goods. This study investigates the consumer welfare implications of observed price levels and price dispersion in electronic markets. We examine the consumer welfare implications of changes in the structure of electronic commerce markets employing comprehensive data sets on e-tailer prices and services collected from BizRate.com in November 2000 and 2001. We find that price dispersion decreased substantially between these two periods, and that measured differences in e-tailer services bear little relation to e-tailer prices.

STANDARDISED PRICE INDICES FOR THE REGIONAL HOUSING MARKET A comparison between the Fixed-Sample Index and the Hedonic Index

Abstract: The correct measurement of house price movements over time on a regional level and for small market segments, with relatively few transactions, is considered The research is based on data of housing market transactions in the Amsterdam Region over the period 1985-1999 In response to the ‘constant quality’ price index problem two main methodologies for index construction have been adopted: a Fixed-sample approach and a Hedonic approach In the hedonic price model a Hierarchical Trend Model is used for estimation A Kalman filter could be applied to estimate models of this kind Price index series, of the Hedonic type and the Fixed-sample type, are presented for the region as a whole as well as per segment and house type within the region The analysis shows that, over the period studied here, the Hedonic index numbers are superior to the Fixed-sample index numbers, being less sensitive to small market segments and small housing categories

Forecasting Consumer Price Indexes for Food: A Demand Model Approach

Abstract: Forecasting food prices is an important component of the U.S. Department of Agricultureis short-term outlook and long-term baseline forecasting activities. A food price-forecasting model is developed by applying an inverse demand system, in which prices are functions of quantities of food use and income. Therefore, these quantity and income variables can be used as explanatory variables for food price changes. The empirical model provides an effective instrument for forecasting consumer price indexes of 16 food categories.

Consumer prices in russia and transforming official statistics

Abstract: Official statistics supply the government and the economy with indispensable information for political and business solutions. A functional infrastructure of information constitutes the fundamental base for proper decisions. The output cannot be better than the informational base. In Russia, the state statistics measure the development of the country, but it has been subject to changes itself.

A Framework for Price Statistics

Abstract: This paper describes the primary framework associating the four principal price indices in the system of economic statistics-the Producer Price Index (PPI), the Consumer Price Index (CPI), and the Export and Import Price Indices (XPI and MPI)-with the macroeconomic value aggregates they decompose into price and volume components. The paper begins by defining the basic algebra of price indices. It then discusses the definition of the value aggregates comprising the goods and services components of the System of National Accounts 1993 (1993 SNA). The paper concludes by briefly considering purchasing power parities and labor compensation indices.

Application of system reconstructability analysis on research of relations between price and financial-economic factors

Abstract: This paper gives a system factor reconstructability analysis model with a residential living cost index and a retail price index of consumer goods as criteria. The impact and cumulative dynamical effects are considered using the following factors: total investment of capital construction, quantity of money M 0 in circulation, money supply M 1 and M 2, total cash payment of the bank, payment of the bank for wages and other personal cash payments, enterprise deposit, total amount of export and import, and gross domestic products. It also constructs a model to study the impacts of some ratios and differences between the increased rates of these factors on the increased rate of the price index, and constructs similar models to study the impacts of the studied year factor increase rates on the price index rates. A model for relations of monthly fluctuations of these factors and the price index is given. Lastly, by studying the results of these models, this paper proposes comprehensive conclusions about the rel...

What are Consumer Price Statistics Good for

Abstract: This paper studies five different aspects of inflation. Undoubtedly, there are manifold requirements made on the consumer price index. It is designed to measure changes in the cost of living and the cost of holding money, to serve as the basis for calculating real interest rate and real exchange rates and to fulfil the co-ordinating role of a core inflation index. The authors of this paper believe that seeking to capture inflation in terms of a single “universal” indicator may lead to an oversimplification of the concept. In its current form, the Hungarian consumer price index does not “purely” suit any one of the theoretical concepts of inflation. The objective of this paper is to draw up a number of proposals related to the methodology of consumer price statistics, which appear to be one of the best data sources. In an attempt to make full use of this quality and illustrate the problems noted above, we will propose a set of indicators, for analytical purposes, designed to be appropriate for the various “areas of application”.

Quality adjustments and capital goods

Abstract: In 1997 Statistics Norway took the initiative to a project aimed at improving the methods for calculating price indices of capital goods (durables) for national accounts purposes. Part 1 of the project was a descriptive study of methods used to handle quality changes for capital goods in the EU/EFTA member states, and some overseas OECD countries (USA, Canada, Australia and New Zealand). Information was collected on the methodology used to compile the Producer Price Index (PPI), Consumer Price Index (CPI) and External Trade Price Indices. Part 2 will probably take place in 1999 and 2000, and will be a normative study building on the results and discussions from part 1 of the project. Part 2 will be concluded by a final report to be published in year 2000 1 . The general impression is that more resources are allocated to produce the CPI than the PPI, while least resources are allocated to the production of external trade indices. This priority on the CPI may reflect the higher interest in society at large for this index, compared to other indices. For external trade indices most countries are using the relatively simple unit value method where data already are collected to produce external trade statistics. Chaining combined with resampling is more common for the CPI than for the PPI and external trade price indices. For the PPI the most common period of resampling and reweighting is every 5 th year. For the CPI the most common methods to handle quality changes are overlap pricing and judgmental adjustment. Cars and personal computers are the commodities for which explicit methods are most used. For the PPI the most common method is also overlap pricing. A few countries are using hedonic methods for handling quality and the method is mostly used in calculating sub-indices in the CPI.

Forecasting monetary union inflation: a disaggregated approach by countries and by sectors

Abstract: Inflation in the European Monetary Union is measured by the Ra.IlJllonised Consumer Price Index (RCP!) and it can be analysed by breaking down the aggregate index in two different ways. One refers to the breakdown into price indexes corresponding to big groups of markets throughout the European countries and another considers the RCP! by countries. The paper shows that both disaggregations are of interest because in each one, the component prices are not fully cointegrated and then have more than one common factor. For purposes of forecasting the RCP! for the global EMU the disaggregation matters in all the horizons, one to twelve months, considered in the paper. The question is that innovations in an aggregate of non-fully cointegrated componentes will have different long-run effects depending on the common trend which they mainly stem from. Then the resulting ARIMA model for the aggregate can have a quite complex structure which restrictions which could be captured more easily through a disaggregate approach