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Commentary on "Alternative Strategies for Aggregating Prices in the Consumer Price Index"
| Content Provider | Semantic Scholar |
|---|---|
| Author | Howitt, Peter J. |
| Abstract | The article by Shapiro and Wilcox is a good example of how data limitations can be overcome by hard work and ingenuity. Consumer expenditure data are not available soon enough to construct a real-time price index that compensates correctly for the (acrossstrata) substitution bias. The authors have shown how these untimely data can be used nevertheless to accomplish two important goals: The first is to estimate the extent of the substitution bias in the official consumer price index (CPI), which they put at 0.3 percentage points per year. The second is to construct a chained price index implementable in real time by using the most recently available expenditure data each year. That would eliminate 80 to 90 percent of the estimated bias. The article presents these results with admirable brevity and clarity; I found little to quibble with. I would just like to put the subject into a broader perspective. Since I am primarily a macroeconomist, and since this conference is being hosted by a central bank, my comments will raise questions as to the macroeconomic significance of the results and their relevance for monetary policy. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://research.stlouisfed.org/publications/review/97/05/9705ph.pdf |
| Alternate Webpage(s) | https://files.stlouisfed.org/files/htdocs/publications/review/97/05/9705ph.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
