Evaluating Imperfections and Biases in Price Indexes During Transition

CERGE-EI Working Paper Series No. 186

21 Pages Posted: 27 Nov 2009

See all articles by Jan Hanousek

Jan Hanousek

Faculty of Business and Economics, Mendel University in Brno; Centre for Economic Policy Research (CEPR)

Randall K. Filer

City University of New York, CUNY Hunter College - Department of Economics; Charles University in Prague - CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences; University of Michigan at Ann Arbor - The William Davidson Institute; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: September 1, 2001

Abstract

The rapidly changing environment of the transition may create special problems for calculation of index numbers that require a fixed basket of goods and outlets. Using referent-level data we find that using a fixed-weight Laspeyres Index may overstate inflation rates by approximately 5 percent a year when compared with a superlative index in the Czech Republic. We find no evidence of such problems using more aggregate data for Bulgaria and Hungary. This suggests that the extent of the problems discovered might have been even greater if we had been able to use item/store level data.

Keywords: CPI Bias, Formula bias, Price Liberalization, Substitution bias, Transition Economies

JEL Classification: C82, E31, P24

Suggested Citation

Hanousek, Jan and Filer, Randall K., Evaluating Imperfections and Biases in Price Indexes During Transition (September 1, 2001). CERGE-EI Working Paper Series No. 186, Available at SSRN: https://ssrn.com/abstract=1514465 or http://dx.doi.org/10.2139/ssrn.1514465

Jan Hanousek (Contact Author)

Faculty of Business and Economics, Mendel University in Brno ( email )

Brno
Czech Republic

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Randall K. Filer

City University of New York, CUNY Hunter College - Department of Economics ( email )

695 Park Avenue
Hunter West 1502
New York, NY 10021
United States
212-772-5499 (Phone)

HOME PAGE: http://econ.hunter.cuny.edu/faculty/filer/

Charles University in Prague - CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences ( email )

Politickych veznu 7
Prague, 111 21
Czech Republic
42 02 240 05 213 (Phone)
42 02 242 27 143 (Fax)

HOME PAGE: http://www.cerge-ei.cz

University of Michigan at Ann Arbor - The William Davidson Institute

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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