The Consumer Price Index: a research agenda and three proposals

Article Abstract:

The Consumer Price Index falls short of providing an accurate measure of the cost of living. To prevent subjective interpretations of its inadequacies, economists should collaborate in analyzing the models used. However, as the CPI is used as a parameter for citizens' tax brackets, there is a possibility that modifying the CPI would be motivated not by a need for accuracy, but to serve political purposes. It is, therefore, necessary to ensure that technical and political issues concerning the CPI are segregated, and that an independent body be responsible for any alterations.

Evaluation, Political aspects, Economic indicators

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Index number issues in the Consumer Price Index

Article Abstract:

Both the Laspeyres and Paasche indexes calculate the cost of living by comparing the present cost of purchasing one basket of goods with its cost in another period of time. The first measure tends to overestimate inflation, while the second tends to underestimate it. These measures do not give allowance for consumers' changing purchasing habits. The Fisher price index, which is the geometric average of the two previous indexes, is more precise. Accuracy can be improved further by taking advantage of scanner data from retail outlets and using hedonic regression techniques.

Models, Consumer behavior, Point of sale systems, Point-of-sale systems

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Data watch: the World Bank's Living Standards Measurement Study household surveys

Article Abstract:

The World Bank formulated the Living Standards Measurement Study (LSMS) to help governments in developing countries create sound economic policies based on data on quality of life in households. The LSMS survey presents detailed data on consumption. It takes into consideration the value of home grown food products, as well as different sources of income. It also provides data on commodity prices. Countries such as Ecuador and South Africa have used LSMS data for programs aimed at remedying poverty.

Economic policy, Developing countries, World Bank, Information services, Quality of life, Household surveys

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